
Class __Mi 







Book_ 



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COPYRIGHT DEPOSIT 



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Public Utilities Ad 
of California 



Introduction by President of Commission 

Biographies of Commissioners 

The Act and its Relations to the Public 

Valuation of Public Utilities 

Leading Railroad and Public Service Commissions 

Constitutional Amendment No. 50 

Constitutional Amendment No. 6 

Constitutional Amendment No. 47 

Public Utilities Election Act 

Public Utilities Act 

Rules of Practice and Procedure of Commission 



COMPILED BY 
EUGENE R. PjALLETT, MANAGER 

LOUIS SLOSS & CO., Investment Securities 

SAN FRANCISCO 
1912 






COPYRIGHTED 1912 

LOUIS SLOSS & COMPANY 

INVESTMENT SECURITIES 

ALASKA COMMERCIAL BUILDING 

San Francisco, Cal. 



tBolie & iBraden Company 

'Printers 

San Francisco, California 

1912 



&CI.A319 125 



Pref 



ace. 



The passage of the "Public Utilities Act", which went into 
effect March 23rd, 1912, marked the beginning of a new era in 
the progress and development of the public service corporation in 
California. We have attempted to make this little book the genesis 
of public service commission history in this State. Hie introduction 
by President Eshelman outlines the attitude of the Commission 
toward the corporations under its jurisdiction. The chapter devoted 
to "The Act and Its Relation to the Public", by Commissioner 
Thelan, who is also attorney for the Commission, outlines some of 
the things which the Commission expects to accomplish in bringing 
about cheaper and better service for the public. The views of these 
two men, who have perhaps been the most instrumental in placing 
this Act on the statute books, are of particular interest as indicating 
the future policy of the Commission. 

Hie fundamental element in determining the cost of service is 
physical valuation of property. Through the courtesy of the local 
manager of one of the largest engineering corporations in the 
United States, we are enabled to include a chapter showing the 
thoroughness and exactness of such a valuation when the work 
is done by modern, scientific methods. This firm is now making 
complete physical valuations of the properties of the Spring Valley 
Water Co., Pacific Gas & Electric Co., Pacific Light and Power 
Corporation, San Joaquin Light and Power Corporation, and a 
number of other public service corporations in California and else- 
where. As the securities of these corporations held in California 
amount in value to millions of dollars, we considered the methods used 
in ascertaining the physical valuations of their properties would be of 
much interest to the readers of this book. 

We devote a chapter to Commissioner Thelen's report entitled 
"Leading Railroad and Public Service Commissions of the United 
States", as it was largely upon the information contained in this 
report and the recommendations which accompanied it that the Act 



was drawn. The discussions therein not only show the trend of 
public service commission legislation in the various States, but also 
the theory on which much of this legislation is based. 

For convenience as a book of reference, the "Public Utilities 
Act" has been carefully annotated and indexed, and the important 
sections relating to the issuance of securities have been set in black- 
face type. Hie volume has been compiled for distribution by the 
Statistical Department of Louis Sloss & Co. in an endeavor to 
provide a work of interest to the busy corporation official and the 
student of public service corporation legislation as well, and to 
further disseminate among investors, both institutional and private, 
a larger knowledge of the fundamental principles underlying this 
recent legislation and by so doing to develop a keener appreciation 
of the added elements of safety and strength back of the stocks and 
bends of California public service corporations which come under 
the jurisdiction of this Act. 

Eugene R. Hallett. 

March 25th, 1912. 



Contents 



Introduction 13 

John M. Eshleman, President of Commission 

Biographies of Commissioners 14 

The Act and its Relations to the Public 17 

Max Thelen, Commissioner and Attorney for the Commission 

Valuation of Public Utilities 25 

Henry A. Lardner, Manager San Francisco Office 
J. G. White & Co., Engineers 

Leading Railroad and Public Service Commissions 35 

Constitutional Amendment No. 50 155 

Constitutional Amendment No. 6 157 

Constitutional Amendment No. 47 161 

Public Utilities Election Act 163 

Public Utilities Act 175 

Rules of Practice and Procedure of Commission 243 

General Index 273 



Railroad Commission State of California, 



COMMISSIONERS 

J. M. Eshleman, President 

H. D. Loveland 

Alex Gordon 

E. O. Edgerton 

Max Thelen, Attorney 



Charles R. Detrick - Secretary 

H. H. Sanborn - Rate Expert 

R. A. Thompson - - Chief Engineer 

H. C. Hazzard - Service Expert 

L. R. Reynolds - Auditor 

Paul Sinsheimer - Stock and Bond Expert 



Introduction. 

BY 

JOHN M. ESHLEMAN, 

President of the Railroad Commission of the 
State of California. 



In a little more than a year, California has made more 
fundamental changes in its laws affecting public utilities than 
have been brought about in most states in a quarter of a century. 
These changes must necessarily be of interest to the dealers in 
securities. I am optimistic enough to believe that to the dealers in 
legitimate securities, they will be of inestimable benefit. A bond 
is to all intents and purposes a mortgage. It constitutes a lien 
upon certain property. It is to the interest of those who hold 
liens on property to know that the property is ample to secure 
their lien. While the bringing about of this result is not the 
prime object of regulation of public utilities, yet it is one of the 
necessary results. The interests of the public and the corporation 
in this regard are the same. Too often in the past liens have 
been created upon corporate property through bond issues and 
the money realized from such bonds diverted from the legitimate 
needs of the corporation, to make large profits for the promoter 
and the corporation official, who makes use of the corporation to 
amass for themselves private fortunes. The public becomes inter- 
ested because it is from the public that the interest on the bonds 
and the money necessary to retire them at maturity must be 
collected through the medium of rates. The proceeds from bonds, 
then become in effect a trust fund which should be utilized in 
the production of a property which will adequately furnish the 
service which the public has a right to demand at reasonable rates. 

Therefore, although a menace to those who desire to profit 
at the public expense, yet the Public Utilities Act, as it now 
stands upon the Statute Books of California, is to be the best 
interest of the financier, who must advance capital, the corporation, who 
should utilize it, and the people at large, who must ultimately repay it. 

March 23, 1912. 



Biographies of Commissioners 



John Morton Eshleman 

John Morton Eshleman (Republican) was born at Villa Ridge, 
Illinois, June 14, 1876, and came to California March 2, 1896. 
He worked in a railroad camp of the Southern Pacific Company, 
during which time he studied to prepare himself for admission to 
the University, entering the University of California in 1 898. In 
1902 he took his A. B. with highest honors and in 1903 the 
degree of Master of Arts, He was admitted to the bar and 
appointed deputy state labor commissioner under Governor Pardee 
and Commissioner W. V. Stafford. He represented the 52nd Dis- 
trict (Berkeley) in the 37th session of the legislature. He was 
appointed, under District Attorney (now Superior Judge) Everett 
J. Brown, deputy district attorney of Alameda County, but was 
compelled by his health to remove to the Imperial Valley. On the 
formation of Imperial County, August, 1907, Mr. Eshleman was 
elected its first district attorney, serving out his term. In November, 
1910, he was elected railroad commissioner from the third district 
and chosen as president of the Commission in January, 1911. 

Alexander Gordon 

Alexander Gordon (Republican), was born in Hants County, 
Nova Scotia, October 1 6, 1 846. He received a common school 
education and was brought up on a farm. In 1 869 he moved 
to California, settling in San Joaquin County, where he engaged 
in the sheep raising industry. In 1875 he moved to Fresno and 
began the growing of raisins on a large scale. Since 1901 he has 
made his residence in Sacramento, where he became the vice presi- 
dent and director of the Sacramento Bank. From 1903 to 1907 
he served as member of Auditing Board to Commission of Public 
Works. From 1907 to 1911 he served as member of Consulting 
River Board, Department of Engineering. Elected member of 
Railroad Commission November 8, 1910, from the First District. 



Harvey D. Loveland 

Harvey D. Loveland (Republican) was born in New York in 
1853 and received his education in the schools of that State. For 
nine years he taught school in New York and Kansas, to which 
latter State he moved in 1876, where he read law and was admitted 
to the bar in 1881, but after practicing for a few years engaged in 
mercantile affairs, to which he has since given his attention. He 
became a resident of San Francisco in 1887. For several years 
he was connected with two of the largest mercantile institutions on 
the coast. He has always taken a lively interest in public affairs; 
was for six years president of the Pacific Coast Jobbers' and Manu- 
facturers' Association; has also recently retired from the presidency 
of the Transmississippi Commercial Congress. As traffic director 
and later as president of the Pacific Coast Jobbers' and Manufacturers' 
Association, he assisted in accumulating the evidence and prosecuting 
the suits before the Interstate Commerce Commission in defense 
of the jobbing interests of the coast in what are known as ^the 
St. Louis Case, the State Toll Case, the Spokane Case, and otihers. 
He is vice-president of the International Mercantile and Bond Com- 
pany, and president of the Merchants and Manufacturers' Securities 
Company. Mr. Loveland is also prominent in Masonic circles and 
is Past Grand Commander of the Grand Commandery of Knights 
Templar of California. He was a member of Governor Pardee's 
staff and is paymaster general of Governor Gillett's staff, with the 
rank of Colonel. He was appointed Railroad Commissioner for the 
Second District by Governor J. N. Gillett November 23, 1907, 
to succeed Andrew M. Wilson, resigned. He was elected a member 
of the Railroad Commission November 8, 1910, from the Second 
District. 



Edwin O. Edgerton 



Born in Yreka, California, January 8th, 1876. Educated in 
the common schools and University of Southern California. Admit- 
ted to the bar in 1 898. Practiced law eleven years in Los Angeles, 
California. Became secretary of Municipal League March, 1909. 
Appointed member of the State Railroad Commission March 
13th, 1912. 



Max Thelen 

Born in Nebraska 1880. Came to San Diego County, Cali- 
fornia, in 1 888. Graduated from National City, San Diego County, 
public schools and High School. Worked five years on ranch. 
Entered University of California August, 1900; graduated May, 
1904. Harvard Law School 1904 to 1906. In office of Olney 
& Olney, attorneys-at-law, San Francisco, November, 1906 to 
May 1907. Assistant attorney and then attorney for Western 
Pacific Railway Company from May 1907 to April 1911. Attor- 
ney California State Railroad Commission April 1911 to date. 
Appointed member Railroad Commission March 13th, 1912. First 
secretary and organizer Berkeley Lincoln-Roosevelt Republican 
Club. Vice-president City Club of Berkeley. Member Common- 
wealth Club of San Francisco, University of California Club, and 
American Society International Law. Lecturer International Law 
University of California. Joint author with John M. Eshleman of 
Public Utilities Act. 



The Public Utilities Act and Its Relation 
to the Public. 

BY 

MAX THELEN, 

Commissioner and Attorney, 
of the Railroad Commission of the State of California. 



The Railroad Commission of California was created by the 
Constitution of 1879. For more than thirty years its jurisdiction 
was confined to "railroad and other transportation companies," 
and as to these companies the Commission had power only to fix 
rates and to prescribe a uniform system of accounts. Finally, in 
March, 1911, the legislature submitted to the people of this state 
three constitutional amendments, the purpose of which was to 
remove certain obstacles in the Constitution to the Commission's 
effective jurisdiction over railroad and other transportation companies 
and to authorize the legislature to confer upon the Commission 
broad powers of regulation and control over the other public 
utilities of the state as well. The Railroad Commission, antici- 
pating the adoption of the constitutional amendments by the people 
on October 10, 1911, sent the writer, during the summer of 
1911, to visit the leading railroad and public service commissions 
of the country. The writer made a careful study of the actual 
working of some twelve of the leading commissions of the country 
and of the statutes under which they operate, and on his return 
drafted, together with President John M. Eshleman of the 
Commission, the new Public Utilities Act. The widest possible 
publicity was given to the bill after the first draft had been 
prepared, and the public utilities affected were given every oppor- 
tunity, both at public hearings and by correspondence, to present 
fully their objections to the bill, and over fifty of the leading public 
service corporations of the state availed themselves, through their 
representatives, of the opportunity so given. The bill was introduced 
in the Senate, at the extraordinary session of the legislature of 
1911, by Hon. Lester G. Burnett on November 28, 1911, and 
in the Assembly on the same day by Hon. W. A. Sutherland. 



1JB LOUIS SLOSS & CO. 

It passed the Assembly on December 12, 1911, by the vote of 
68 to 1 , and the Senate on December 16, 1911, by the vote of 
23 to 0, was signed by Governor Johnson on December 23, 191 1, 
and became effective on March 23, 1912. 

The Act will be discussed under the following heads : ( 1 ) the 
Railroad Commission; (2) duties of public utilities; (3) powers 
and duties of the Railroad Commission; (4) procedure before the 
Railroad Commission; (5) procedure before the courts; (6) 
effect of the Act on existing powers of incorporated cities and 
towns; and (7) organization of the Commission for its work. 

I. The Railroad Commission. 

The reorganized Railroad Commission consists of five members — 
President John M. Eshleman, H. D. Loveland, Alex Gordon, 
Edwin O. Edgerton, and Max Thelen, who is also attorney for 
the Commission. The terms of these commissioners will expire 
on January 1, 1915. The Governor will thereupon appoint one 
commissioner to serve until January 1 , 1917, two to serve until 
January 1 , 1919, and two to serve until January 1 , 1 92 1 . The 
terms thereafter will be six years. The salary of the commissioners 
is $6,000 per annum. Each commissioner, when designated by the 
Commission, has power to hold any investigation, hearing or inquiry, 
but the order of a commissioner must be approved by the Com- 
mission before its becomes effective. It follows that all the 
commissioners may hold separate hearings at the same time. In 
this way, the capacity of the Commission for work has been 
greatly augmented. The office of the Commission is in San 
Francisco, but hearings are held in such parts of the state as best 
subserve the convenience of all parties affected. 

The Railroad Commission is given power to regulate and control 
all the public utilities of the state, except that the incorporated 
cities and towns of the state, including the city and county of 
San Francisco, retain the powers over public utilities which they 
had on March 23, 1912, with the privilege, however, of voting 
those powers into the Railroad Commission. Public Utilities are 
defined to include the corporations or persons which own, control, 
operate or manage railroads; street railroads; express companies; 
sleeping, dining, fruit and other car companies; vessels regularly 



THE PUBLIC UTILITIES ACT. 19 

engaged in transportation over regular routes between points within 
this state; pipe lines; gas plants; electric plants; telephone lines; 
telegraph lines; water systems; public wharves; and warehouses 
used in connection with the transportation of property by a common 
carrier or vessel, or the loading or unloading of the same. 

The name Railroad Commission is preserved for the reason that 
this is the name given by the Constitution to the body upon which 
the legislature is authorized to confer these additional powers. 

2. Duties of Public Utilities. 

All charges made by public utilities must be just and reasonable. 
Their service, instrumentalities, equipment and facilities shall be 
such as will promote the safety, health, comfort and convenience 
of their patrons, employees and the public. Their rules and 
regulations must be just and reasonable. They must file with the 
Commission schedules or tariffs showing their rates, fares and 
charges and can change the same only on 30 days' notice unless a 
lesser time is authorized by the Commission. No increase in 
rates, fares or charges may be made without the permission of the 
Commission after a showing justifying the increase. No free or 
reduced rate transportation or service may be given except as 
specifically authorized by the Act. Preferences and discriminations 
are made unlawful. Common carriers are forbidden to charge 
more for transportation for a shorter than for a longer distance 
over the same line or route in the same direction except after 
securing the permission of the Commission: a similar provision 
is made applicable to telephone and telegraph corporations. 
Railroad corporations must in proper cases provide on their own 
property such connections, spurs and tracks as may be necessary 
to accommodate the needs of shippers. Street railroads under the 
control of the Commission may not charge more than five cents for a 
continuous ride in the same general direction within the limits of 
any city or town except on a showing before the Commission that 
the greater charge is justified. All public utilities must furnish the 
information concerning their business which may be required by 
the Commission and permit free access to their records to the 
representatives of the Commission and comply fully with all orders 
and directions of the Commission. 



LOUIS SLOSS & CO. 



3. Powers and Duties of Commission. 

The Railroad Commission is given very wide powers over the 
public utilities of the state. The Commission is given power, among 
others — 

(a) To fix all rates, fares, charges and classifications. 

(b) To establish through routes and joint rates, fares and 
charges. 

(c) To investigate all interstate rates, fares and charges 
affecting this state and to apply to the Interstate Commerce Com- 
mission or to any court of competent jurisdiction for relief. 

(d) To prescribe just, reasonable, safe and proper service, 
equipment, facilities and methods. 

(e) To prescribe additions, extensions, repairs and improve- 
ments. 

(/) To direct that additional cars or trains be operated and 
that trains stop with greater frequency and at proper places. 

(g) To direct connections, in proper cases between the tracks 
of railroad or street railroad corporations. 

(h) To direct, in proper cases, that switch connections and 
spurs be installed. 

(i) To direct that physical connections and joint rates over 
two or more telephone or telegraph lines be established in specified 
cases. 

(/) To direct the use, in proper cases, by one public utility 
of a part of the property of another utility, on, over or under any 
street or highway. 

(k) To direct the installation of safety appliances and other 
devices to safeguard the health and safety of employees, patrons 
and the public. 

(/) To regulate crossings of railroad tracks and streets or 
highways in specified cases. 



THE PUBLIC UTILITIES ACT. 21 

(m) To investigate the cause of accidents and to take steps 
to prevent their recurrence. 

(n) To provide demurrage rules, and rules for the collection 
and delivery of express packages and telephone and telegraph 
messages. 

(o) To fix standards, classifications, measurements and practices 
of gas, electrical and water corporations. 

(p) To ascertain the value of the property of every public 
utility. 

(q) To establish uniform systems of accounts for each class 
of public utility. 

(r) To permit or refuse to permit new street railroad, gas, 
electrical, telephone or water corporations to enter a field already 
served by an existing corporation of like kind. 

(s) To permit or refuse to permit corporations mentioned in (r) 
to exercise rights under new franchises or permits. 

(0 To regulate transfers of the property used in the public 
service of public utilities, except express corporations, wharfingers 
and warehousemen, and the acquisition by one public utility of 
stock in another utility. 

(u) To regulate and control the issues of stocks, bonds and 
other evidences of indebtedness of all public utilities within the state. 

4. Procedure Before Railroad Commission. 

Any person or corporation, chamber of commerce, board of 
trade, or any civic, commercial, traffic, agricultural or manufacturing 
association or organization or any body politic or municipal 
corporation may by petition in writing, filed with the Commission, 
complain of any act done or omitted to be done by any public 
utility in violation, or claimed to be in violation, of any provision 
of the act or any order or rule of the Commission. Public utilities 
have the same right to complain. Hearings and investigations may 
also be held by the Commission on its own initiative. The Com- 
mission has adopted Rules of Practice and Procedure specifying 



11 LOUIS SLOSS & CO. 

in detail the steps necessary to be taken by parties desiring to file 
formal complaints or applications with the Commission. These rules 
provide a procedure which enables the Commission to get at the 
heart of a controversy or application simply and speedily, without 
regard to the technical rules of evidence or procedure. A copy 
of these rules may be secured by any citizen upon application to 
the Commission. Hearings are held before the Commission sitting 
en banc or before a commissioner designated for that purpose. 
After the hearing, the Commission files its decision, which goes into 
effect within twenty days unless otherwise specified in the order. 

5. Procedure in the Courts. 

The provisions concerning procedure on appeals in the courts 
from orders of the Commission have been drawn with considerable 
care for the purpose of securing a procedure which should be 
simple and expeditious and should properly protect the Commission 
and the public. No cause of action may arise in any court out 
of any order or decision of the Commission except to a person or 
corporation which shall first have asked the Commission for a 
rehearing. The Commission, if it finds that it has made an error, 
can thus modify its decision before litigation in the courts results. 
If the rehearing is denied, or if after a rehearing the Commission 
reaffirms its order, any party feeling aggrieved may go directly to 
the state supreme court for a review of the question whether the 
Commission acted within its authority in making its order or decision. 
On the hearing before the supreme court, no new evidence may be 
introduced, but the matter must be disposed of on the evidence 
presented to the Commission. In this way the public utilities will 
be compelled, as they should be, to present their evidence before 
the Commission, instead of holding it back and then going to the 
courts and presenting great masses of new and additional evidence 
which the Commission did not have before it when it rendered its 
decision. The findings and conclusions of the Commission on 
questions of fact are made final, thus preventing the great abuse of 
a complete re-trial in the courts of a case on its facts. If the court 
suspends the order or decision of the Commission, pending the 
hearing on the review, the party petitioning for the review must 
file a bond to protect the parties injuriously affected by the delay 



THE PUBLIC UTILITIES ACT. 23 

in the enforcement of the Commission's order, and if the Com- 
mission's order reduced rates or fares, the supreme court must direct 
the public utility affected to pay into court or into some bank 
or trust company paying interest all rates or fares collected by it 
in excess of the rates or fares prescribed in the Commission's 
order. If the Commission ultimately wins, all excess rates and 
fares so collected and deposited must be paid back by the public 
utility to the persons or corporations who were compelled to pay 
the same. It is hoped that the procedure thus provided will tend 
to prevent the long drawn-out court proceedings and the reliance 
on technicalities to which public utilities have largely resorted in 
other states to tie the hands of the state, acting through its railroad 
or public service commission. 

The Act prescribes adequate penalties for its violation by public 
utilities, their officers and employees and by other corporations and 
persons. 

6. Effect of Act on Powers of Incorporated Cities 

and Towns. 

Although the language of the Public Utilities Act conferring 
powers upon the Commission is very general in its terms, the Act, 
following the provisions of Section 23 of Article XII of the 
Constitution of the state, as amended on October 10, 1911, 
specifically provides that nothing therein contained shall affect the 
powers over public utilities vested in any city and county or 
incorporated city or town at the time the Act should go into effect, 
which was March 23, 1912. The result of this provision is that 
the city and county of San Francisco and the incorporated cities and 
towns of the state retain such powers of control as were vested 
in them on that day until they vote them into the Commission if they 
so desire. The most important of these powers are the power to 
fix rates and fares, a power which most, if not all, of our incor- 
porated cities and towns have as to many public utilities, and the 
power to regulate the service, equipment, facilities and extensions 
of public utilities, a power which some of our cities have secured 
by their freeholders' charters or otherwise. The question as to 
what powers are vested in the Commission and what powers in the 



24 LOUIS SLOSS & CO . 

municipality must be answered separately as to each municipality 
and will depend on the constitutional, statutory and charter provisions 
applicable to each such municipality. 

Section 23 of Article XII of the Constitution of this state also 
provides that the legislature shall establish the election machinery 
by which the incorporated cities and towns of the state may, if 
they so desire, confer their powers as to any or all classes of public 
utilities upon the Commission. The extraordinary session of the 
legislature accordingly passed a companion act to the Public 
Utilities Act, referred to as the Hewitt Election Act, introduced 
in the Senate by the Hon. Leslie R. Hewitt, passed by the 
legislature, approved by Governor Johnson on January 2, 1912, 
and effective on March 23, 1912. The Hewitt Act provides 
that an election for this purpose may be called in any city and 
county, or incorporated city or town, by the legislative body thereof 
either on its own initiative by a three-fifths vote of its members 
or in pursuance of a petition signed by 10 per cent of the qualified 
electors and filed with the clerk of the legislative body. A majority 
of the votes cast on any proposition submitted at the election is 
sufficient to confer upon the Commission power over the public utility 
affected by that proposition. If the city or town has voted its 
powers as to any class of public utilities into the Railroad Com- 
mission, it may thereafter by a similar vote reinvest itself with such 
power. 

The Commission has no power over municipally owned plants. 
The same Section 23 of Article XII of the Constitution, under 
which the legislature acted in passing the Public Utilities Act, in 
defining the corporations and persons to be affected, uses the words 
"every private corporation," thereby excluding by inference a 
municipal or other public corporation. 

7. Organization of Commission for Its Work. 

In order to be able to handle the great amount of business which 
it will be called upon to perform under the Public Utilities Act, 
the Commission has organized its work thoroughly and systematically. 
It has provided the following six departments: (1) office; (2) 
legal; (3) rate; (4) engineering; (5) statistics and accounts; 
and (6) service. The office department consists of the secretary 



THE PUBLIC UTILITIES ACT. 25 

and his staff and will perform the administrative work of the 
Commission. The legal department will represent the Commission 
in court, advise the Commission and each commissioner on all 
questions of law, supervise all formal proceedings before the 
Commission and have particular responsibility as to applications for 
permission to issue stocks, bonds or other securities. The rate 
department will handle all matters affecting the rates of all public 
utilities. The engineering department will perform the Commission's 
engineering work as to all public utilities and its service work as 
to railroad and other transportation companies and water corpora- 
tions. The department of statistics and accounts will work out a 
system of accounting for each class of public utilities, wherever 
feasible, will edit the annual and other reports of public utilities to 
the Commission, and will furnish the necessary information from 
the records of the public utilities in cases of rate fixing, approvals 
of stock and bond issues and kindred matters. The service 
department will have supervision over the quantity, quality and 
safety of the service rendered to the public by gas, electrical, 
telephone and telegraph corporations and wharfingers and ware- 
housemen. Each department will have its work properly subdivided 
so as to secure as far as possible men peculiarly fitted to handle 
each kind of work which the Commission will be called upon to 
perform, to the end that the Commission's business may be disposed 
of promptly and efficiently. 

The problem of placing the relation between the public utilities 
and the people on a basis which shall be fair and reasonable and 
just is the greatest problem which faces this state to-day. It is an 
economic problem and affects directly the comfort and prosperity 
and happiness of every man, woman and child in this state. The 
framers of the Public Utilities Act hope and believe that the 
administration of that Act will prove of tremendous benefit to the 
people of this state, while at the same time winning for the public 
utilities a measure of confidence on the part of the traveling and 
consuming and investing public which they otherwise could not 
possibly have won. The writer trusts that the administration of 
this Act will conduce materially to the end desired by all good 
citizens — the happiness and prosperity of this great state and of 
all her people. 



Valuation of Public Utilities. 

By Henry A. Lardner, 
Manager of San Francisco Office, J. G. White & Co., Inc. 



The unmistakable trend of the times is toward the regulation 
and control of all public service or utility corporations by the 
creation of State Commissions endowed with broad powers, and the 
broadening for that purpose of the powers of those older commis- 
sions created primarily for the regulation of common carriers. 

As the regulation of a public utility usually begins with an 
investigation of the cost and the fairness of its charges for service, 
and as these have or should have a definite relation to the value 
of the investment or physical property, it follows that before the 
equity, or otherwise, of rates can be established, it becomes necessary 
to determine beyond question the fair value of the property or plant 
of the company under investigation. 

This, together with the limitation by the Commissions, both as 
regards the class and amount of securities which a public service 
corporation may issue, and the increasing demand of financial 
institutions for more detailed information regarding the corporations 
in which they are interested, has resulted in the development of 
an entirely new branch of engineering, viz., the detailed valuation 
of corporate assets. 

Before the institution of public utility commissions, the necessity 
of knowing in detail a corporation's actual assets and their value 
was not realized to anything like the present extent, and without 
this incentive it is safe to say that a large majority of corporations 
neglected to obtain this valuable information. Since this data may 
now be called for by the Commissions, the public utility corporations 
have awakened to a need of these valuations, which they at first 
were disposed to look upon as a burdensome and unnecessary 
expense, but which on the contrary they are actually finding of the 
greatest value to themselves in making a comprehensive analysis of 
their own affairs. 



28 LOUIS SLOSS & CO . 

The making of a competent physical valuation is a very consid- 
erable undertaking, and to arrive at the full and ultimate value of 
the property, it must be made in great detail. To do this and to have 
the work accomplished with expediency and economy, a valuation or- 
ganization must include the necessary executive and engineering experi- 
ence to properly direct the field and office staff. 

As in construction engineering, so also, in appraisal engineering 
are the best results only obtained by such engineers having in their 
employ specialists in each branch of the many which go to make 
up the large public service corporations of to-day, as an appraisal such 
as is now demanded by many of the financial institutions and the 
Commissions in order to meet all requirements and justify the outlay 
involved, necessitates, not only an intimate and thorough knowledge 
of the construction entering into the properties being valued, but a 
thorough and intimate knowledge of their operation and management 
as well. Only by such a combination can full justice be done, and 
much of hidden value be discovered and properly tabulated. 

In arriving at the value of a property two general methods may 
be followed. First, in the event of the Company's records and 
books having been carefully kept, these should give, with a fair 
degree of accuracy, what has been expended in the actual con- 
struction, which plus certain charges which most companies frequently 
fail to take into account, should represent the original cost. 

This method, when applied alone, however, is open to objection, 
as aside from the fact that a company's books seldom contain all 
the information required, a field check is in nearly every case 
necessary in order to verify the records or to ascertain what changes, 
additions or deductions have been made since the date of original 
construction. Furthermore, the fundamental basis recognized by 
both the Courts and Public Service Commissions on which the value 
is to be arrived at is the Cost of Reproduction; that is, the cost 
of reproducing the property as it actually is at the time of the 
appraisal. Therefore, while the cost as ascertained from the books 
may be of historic interest and of assistance in settling many of 
the complex questions which naturally arise in work of this char- 
acter, it is by no means conclusive. 



VALUATION OF PUBLIC UTILITIES. 29 

The second and most universally accepted method is to determine 
the value by an actual field inventory and inspection of the property. 

This field inventory method involves ( 1 ) the preparation of a 
complete inventory of all the property of the company; (2) a study 
of the local conditions affecting the cost of all work, the age and 
condition of each part of the construction, machinery or plant; (3) 
the determination of fair unit prices, and the application of such 
prices to the verified inventory; (4) study and allowance of overhead 
charges. 

By the combination of the detailed inventory, unit prices, and the 
proper overhead charges, the value of the physical property is derived, 
and if desired, these results may be tabulated and segregated so as to 
indicate the location of the company's property in any desired geo- 
graphical or physical division, and its use for the generation, the 
distribution, or other functions of its products. 

The first and most important step in the valuation of an enter- 
prise is the inventory and valuation of the physical property. 

The proper direction of the field parties is of great importance, 
and detailed reports covering their progress, the amount of work 
done, and conditions as found should be forwarded to the office at 
the end of each day's work; also such requests for additional data, 
maps or plans as may be required not only for the work upon which 
they are immediately occupied, but for that in prospect within the 
immediate future, say from five to six days. 

The best results are obtained by splitting the staff into different 
groups or divisions, each group of engineers being in charge of a 
field cheif, these latter being under the direction of and reporting to the 
manager of the department having the appraisal work in charge. 

The progress of the parties in the field as well as, of course, 
the office staff, must be carefully followed in order not only to 
have the work done properly, but that there may be no duplication 
or lost motion, and that the client may receive full value for his 
expenditures. 

The field notes which should show as far as may be necessary, the 
actual details and design, form a complete and valuable record, which, 
aside from their purpose of arriving at the value of the property, often 
prove of great future value. 



30 LOUIS SLOSS & CO. 

The preparation of the Cost Data and Unit Prices, is a feature 
of the appraisal which demands and should receive the most careful 
consideration, involving as it does the cost of all material entering 
into the construction, labor prices, from day labor to the engineering 
and executive organization, freight rates, hauling, warehousing, etc. 
In every case prices should be prepared to cover the construction at the 
place where the inventory is taken. This necessitates the applying 
of the unit prices covering the article, and if any distance from the 
market, freight or team allowance, or both, as the case may be, 
plus storage, purchasing, handling, etc., together with such element! 
as may enter into each case. 

Prior to the preparation of the unit prices, however, a study of the 
situation should be made by the chiefs of departments, they checking 
all field notes, and making a careful survey of the various factors in- 
volved for the purpose of arriving at the proper charges covering the 
construction of such work as may have been done under other than 
normal conditions, such as heavy hauling in mountainous or difficult 
countries, inaccessibility to railroads, etc., and proper provision made 
for costs to the company of work which could not be avoided at the 
time of construction without denying to the public the benefits of the 
service until such time when the construction might have been carried 
out under more favorable conditions. 

The cost arrived at should not necessarily be based on doing all the 
work at any one time, but due consideration should be given to the 
manner in which the work was actually done, and if it extended 
over a term of years, the proper allowance made therefor. 

In view of the many stages and developments through which the 
large plants have passed with resultant frequent reconstruction, every 
endeavor should be made to obtain as intimate and correct knowledge 
of the construction and development of the business as is possible 
to secure, as only in this way can full justice be done to the work 
for which the engineers have been employed. 

Records should be investigated, and insofar as possible, such 
data as may be secured, either verbally or by means of such records, 
used in making such deductions as may be necessary in order to 
arrive at the proper conclusions. These investigations will not only 



VALUATION OF PUBLIC UTILITIES. 31 

serve the purpose of bringing to light certain facts in regard to the 
construction of the plant in use at the time of the inventory, but will 
also enable the engineer to understand and show what portions of the 
properties, owing to the advance of the art, or other causes, are not 
in use or have had to be abandoned. 

In every valuation it is necessary to bear in mind and to consider 
that improvements, methods, and inventions have revolutionized 
untility service, often necessitating, at great expense, the substitution 
of new apparatus before the old had run its useful life. 

This latter is brought out for the purpose of fixing in the mind of 
the engineer the necessity for a proper allowance for depreciation 
covering other features than simple wear and tear, as for instance, 
obsolescence, inadequacy, etc. Every company must of necessity 
protect itself against all these different phases of depreciation. 

A thorough understanding of depreciation and its proper appli- 
cation to the various elements is essential as otherwise a grave 
injustice may be done to the company not only in the application 
of depreciation on the construction work done, but also in the 
provision which may be required out of earnings for future 
depreciation. This in itself requires careful thought and study of 
the various elements entering into the construction of a public 
service enterprise, and a thorough understanding of the history, use 
and condition of the various component parts in order to determine 
the rates of depreciation to be applied and provided for, as well as 
the method by which these results are to be obtained. 

In addition to the value of the property as obtained by a careful 
inventory of its different component parts, there are, of course, 
other values which attach thereto, sometimes called intangible, but 
which, as a matter, of fact, are quite as tangible as those pertaining 
to the physical property and which must be carefully considered 
and included in the valuation. 

In arriving at the cost to reproduce an operating property it is 
necessary to divide the time from the inception of the project to 
the present condition of the business into three distinct periods, as 
follows : — 



32 LOUIS SLOSS & CO. 

Organization Period, or the period from the inception of the 
project to the time when the necessary financial arrangements are 
completed, franchises and permits secured and everything in readiness 
for actual construction. This period involves the study and appli- 
cation of such allowances as may be proper for promotion expenses, 
legal services, preliminary engineering, surveys, reports, incorporation 
expense*, printing and engraving, discounts on securities, etc. 

Construction Period: This period covers the time between the 
end of the promotion or organization period and the completion 
of the construction and final tests and necessitates a close study on 
the ground of all plans, methods of construction, classes and quality 
of materials used, methods employed, cost of various materials, 
labor, freight, hauling, engineering, in short, the cost of the labor 
and materials necessary to reproduce a structure after the plans 
are made, the materials purchased and the organization completed, 
and includes in the cost of the material the actual cost delivered to 
the job and in the cost of the labor such men and superintendence 
as may be directly chargeable to the work. 

There should then be added, usually in the form of a percentage, 
certain other expenses generally known as "overhead charges", the 
amount of which varies with the nature of the construction. These 
"overhead charges" cover such disbursements as may have been 
made for Administration, which covers salaries and office expenses 
of General Office, Purchasing, Accounting, Legal, etc. Interest on 
money used in the construction from the time of its acquisition to 
the time the property is ready for operation, less any interest received 
on money deposited during the construction period. Taxes, such as 
State, County, Municipal, and other taxes on property acquired to 
the actual beginning of operation; Liability Insurance, such as 
employees' hospital and medical expenses, adjustment of claims, 
final adjustment, etc., or where this is covered by insurance, such 
premiums as may be paid to Liability Companies. Engineering 
and Engineering Supervision, such as salaries and expenses of 
engineers and staff, preparation of plans and specifications, field 
engineering records and progress reports, superintendents, inspectors 
and general foremen, tests, trial runs and outside inspection, etc. 



VALUATION OF PUBLIC UTILITIES. 33 

Contingencies, which covers unforeseen expense due to delays, 
strikes, floods, quicksand, uncertain foundations, loss and breakage, 
change of plans, loss by fire, etc. Omissions from inventory, due to 
incomplete records, inability to inspect on account of construction 
being submerged or buried, as well as property entirely overlooked. 
Tools and Plant, which covers tools lost, worn out or broken, main- 
tenance and repair of tools, and wear and tear on construction plant, 
where these are not included in the itemized cost. 

Business Development Period: This period covers the cost to 
the company of developing its business to the point where it is an 
earning property with an income sufficient to cover the necessary 
interest on its investment, cost of operation, taxes, depreciation, etc. 
There are various methods of arriving at the cost of this development 
period, some of which have had the recognition of the Courts and 
Public Service Commissions. 

Considering that this valuation work may be the basis for sale, 
issuance of securities, or regulation of rates, the work should be 
done in such a manner, both on the detailed inventory and the 
assembling and pricing of data, as to comply with the demands of the 
financial interests and the public service commissions, and to inspire 
them with confidence that the appraisal has been thoroughly and fairly 
made, and that the methods employed and the values derived have 
been proper and justifiable. 

It is also necessary and of importance that the field inventory, pricing 
and assembling of data be done in such a manner that each step 
may, if necessary, be easily verified, as it is frequently the case that 
the engineers who have made the original appraisal, although having 
the subject and the value well in mind, are not always available 
when some question arises, necessitating a segregation or analysis of 
certain quantities or prices. An inventory and appraisal in order 
to answer the purposes for which it is intended should not only 
show the values of the component parts and their totals, but should 
be made in such a way that the items making up these totals can 
be easily identified and checked. 

There is no doubt that impartial appraisals of properties will in 
future be looked upon as of as much importance and necessity as 



34 LOUIS SLOSS & CO. 

stock taking, or an audit of the company's books, as only in this 
way can a company arrive at a thorough knowledge of its condition. 

It frequently happens that appraisals give the officials of a 
company an added insight into its affairs, and disclose conditions 
not before dreamed of, and often prove conclusively that the 
company is not obtaining a proper return on portions of its 
investment. 

It is the experience of appraisal engineers that corporations 
undertaking physical valuations have greatly enlarged their ideas as 
to the utility of these statistics, and frequently during their prepara- 
tion have called for ramifications in form with many possible uses 
in view, far beyond the original ideas; Furthermore, the field notes, 
records, drawings and tabulations collected by the appraisers form 
the basis of a complete and detailed record of the company's affairs 
from a physical standpoint and are of inestimable value. This is par- 
ticularly true when the proper records have not been kept during the 
construction or operation of a property, or where such records have 
been lost or destroyed. 

It has developed that with an organization trained in the making 
of detailed valuations, the cost of doing the work is remarkably 
low in view of the great value which has been found to attach to 
the data collected and compiled. 

As the time is approaching when all public service corporations 
will of necessity be valued either for rate making, the issuance of 
securities, or both, and as such valuations cannot with fairness to 
the companies, and to carry conviction, be hurriedly or superficially 
prepared, it would seem the part of wisdom to anticipate this 
requirement. A valuation once properly prepared can, at relatively 
small clerical and engineering expense, be so kept up to date as to at 
any time show the true physical assets of the company and successfully 
pass the scrutiny of Commissions and the Company's financial sponsor*. 



Leading Railroad and Public Service 
Commissions. 



By Max Thelen. 



Railroad Commissioner and Attorney for the Railroad Commission 
of the State of California. 



To the Honorable the Railroad Commission of the Stale of Cali- 
fornia. 

GENTLEMEN: On June 26, 1911, your Commission adopted 

a resolution directing me to visit the leading railroad and public 

service commissions of the country and the Interstate Commerce 

Commission, for the purpose of investigating "the powers and Investigation of 

workings of said commissions, the steps which they may be taking " ie s ^ siems °* 

to secure the physical valuations of the properties of the public n • • 

... . i • i i i i ir • i Commissions. 

utilities over which they have control, and proceedings in the matter 

of establishing express and other rates and office organization, and 
the litigation in which they may be involved, so that this Com- 
mission may be better able to advance and safeguard its similar 
work within the State of California," and to present to your 
Commission a report in writing of the results of my investigation. 
Acting under these instructions, I left San Francisco on July 3, 
1911, and visited the railroad or public service commissions of Commissions 
Oregon, Washington, Nebraska, Minnesota, Wisconsin, New York, visited, 
Massachusetts, Maryland, Georgia, Texas and Oklahoma, and the 
Interstate Commerce Commission, returning to my duties here on 
August 22, 1911. 

I talked with nearly all the commissioners and department heads 
for the purpose of ascertaining the work being done by each 
commission and its respective departments. I also bore in mind 
the necessity of passing a statute in this State after the adoption 
of the constitutional amendments affecting your Commission, and 



36 LOUIS SLOSS & CO. 

Legal questions made inquiries from all the commissions concerning the working of 

particularly their particular statutes and the amendments, if any, which have 

* recently been adopted, or which the respective commissioners might 

have to suggest. I present herewith my report, by states, in the 

order in which I visited them. 

Oregon. 

i. 

Introduction. 

The Railroad Commission of Oregon was created by Act of 

February 18, 1907. The Commission exercises control over all 

railroad, union depot, terminal, car, oil, tank line, sleeping-car, 

freight, freight line and express companies, except street and other 

railroad companies lying entirely within the limits of a city. The 

Jurisdiction act is modeled largely on the Wisconsin statute, and follows it as 

modeled after to procedure on appeal from the orders of the Commission and 

consin con t ro l f rates, service, facilities and equipment. 

Oregon has no stock and bond law and no public convenience 
and necessity or indeterminate permit law. A proposed public 
utilities law, passed by the legislature of 1911, and signed by the 
Governor, was held up by a referendum and will not be voted upon 
until November, 1912. 

II. 

Organization and Office System. 

The Commission. — The commissioners are Clyde B. Aitchison, 

Chairman, a lawyer; Thomas K. Campbell, a lumberman; Senator 

Frank J. Miller, a foundryman and labor leader. The term of 

Commissioners office is four years and the salary $4,000.00 per year. Two of 

the commissioners are elected from the two congressional districts 

of the state and the third at large. The statute provides that no 

commissioner shall pursue any other business or vocation. Mr. 

Devote entire Aitchison tells me that this provision is observed. The statute also 

? ipor/f. provides that each commissioner "shall devote his entire time to the 



REPORT OF COMMISSIONER THELEN. 



37 



duties of his office." Oswald West, the present Governor of 
Oregon, made his record as a member of the Railroad Commission 
and was elected while such commissioner. Mr. Aitchison was 
formerly clerk of the Tax Commission, then secretary of the old 
Board of Railroad Commissioners, then appointed by Governor 
Chamberlain in 1907, and then elected by the people, and has been 
chairman of the board since January, 1911. 

Employees. — The Commission employs a secretary at a salary Employees 
of $2,000.00 per year; a rate expert at a salary of $2,000.00 salaries. 
per year; an engineer at a salary of $2,000.00 per year; an 
assistant engineer at a salary of $1,500.00 per year, and a 
stenographer at a salary of $1,200.00 per year. The Commission 
also at times calls in a consulting engineer, particularly for inspection 
purposes. The consulting engineer is paid only for such time as 
he devotes to the work. Mr. Aitchison showed me a quarterly bill 
for such engineer amounting to $170.00. 

Office System. — The secretary uses a decimal filing system. This Statistical files. 
system will be discussed more in detail in connection with the 
Public Service Commission of the Second District of New York. 
Rates in effect are filed in cases with pockets, both numbered. 
Rates which have been superseded are pasted into scrapbooks about 
four inches thick with leather backs and then stored. Both the 
effective and the superseded rates are indexed by a card system. 
In the case of commodities, this is a triple index, being arranged 
as to (1) issuing railroad with its filing number, (2) Commission's 
filing number, (3) commodity. 

The library is well kept up and contains an almost complete set 
of state railroad commission reports. It also contains a large 
number of stockholders' reports of the different railroad companies. 
The Commission has secured practically a complete set of these 
reports, in so far as the railroads of Oregon are concerned. 



III. 
Physical Valuation. 

The Commission is now engaged in ascertaining the value of 
the railroad properties within the State. No findings have been 



38 LOUIS SLOSS & CO. 

made as to any particular railroad, but the work is being carried 
on as to all of them. A formal notice was prepared and addressed 
Method of to eacn railroad, reciting that pursuant to the provisions of the 
ascertaining statute, the Commission would, on a day certain, proceed to 
physical valuation, investigate to ascertain the matters specified in the statute ; that the 
investigation would be continued from time to time and from place 
to place as might be found desirable; and that the railroads would 
be entitled to appear and be heard and to have process to compel 
the attendance of witnesses. The railroads thereupon appeared and 
all of them, with the exception of the Southern Pacific Company, 
have furnished data concerning both the original cost of construction 
and the present cost of reproduction. A form of return, practically 
identical with that prescribed by the Interstate Commerce Com- 
mission in its classification of expenditures for road and equipment, 
was prepared by the Commission and sent to each of the railroads. 
The information requested has been furnished on these forms by 
all of the railroads, except the Harriman lines, which used slightly 
different forms. Upon receipt of the information required, a hearing 
is had. A large portion of the testimony is generally devoted to 
the question as to the relative sum necessary to be paid by the 
railroad companies for right of way in excess of its real value. 
The Oregon Commission seems to follow in this respect the 
Multiple used. Minnesota Commission, which established a multiple of three as 
to country land, and about one and twenty-five hundredths as to 
city terminal property. The results of these investigations will be 
published in the annual report, but not in as much detail as the 
Washington findings, and will be used, but only in conjunction with 
other elements, in fixing rates. 
Work of I examined in detail the work now being done by Engineer 
Engineer. W. H. Earl of the Commission along these lines. Mr. Earl has 
examined the original records, such as profiles, vouchers, and 
contracts to be found in the railroad offices, and in this way has 
secured complete data concerning the original cost of construction 
of most of these lines. For some of the lines, he has worked out 
in detail the cost of reproduction, according to unit prices. He has 
worked out carefully a series of unit prices for the different kinds 
of material used in railroad construction. His results were secured 
by ascertaining the price actually paid in a large number of cases, 



REPORT OF COMMISSIONER THELEN. 



39 



and striking an average. Chairman Aitchison of the Commission 
considers the work which the Commission has done in this matter 
to be of very considerable merit. Mr. Earl has found the quantities 
as submitted by Mr. Pope of the Harriman lines to be generally 
about correct, but points out the necessity of scrutinizing with the 
greatest of care the last items on the list of expenditures, such as 
freight for men and materials, legal expenses, equipment, interest 
and commissions. These last items alone raised the valuation 
submitted for one of the Harriman lines from about $29,000,000 
to about $40,000,000. 

IV. 

Public Utilities. 

As already stated, the act of the legislature of 1911, making 
the Railroad Commission the Public Utilities Commission of Oregon 
and raising the salaries of the commissioners from $4,000.00 to 
$5,000.00 a year, has been held up by a referendum. The 
opposition came from citizens of Portland who had prepared an 
amendment to their city charter providing for a City Public Service 
Commission. After the referendum had been invoked, the Portland 
measure was defeated at a city election. The result is that one 
measure for control has been defeated and the other is held up. 

Chairman Aitchison condemns strongly the provisions of Senate Commissioner 
Constitutional Amendment No. 47 to be voted on in this state on c ^ en \ m 
October 10, 1911, providing that incorporated cities and towns at aj 
may retain the powers which they now have with respect to public 
utilities. He is strongly of the opinion that all the powers with 
reference to public utilities ought to rest in the state board. 



V. 

Rate Making. 

Chairman Aitchison is of the opinion that the cost of reproduction Discussion of 

basis for rate fixing purposes is fraught with very serious dangers. me .. S 

tt r i i r i ii. ,.ii i basis for rate 

Me reels that rates nxed on that basis are likely to become 



inordinately high, particularly if in ascertaining the cost of repro- 
duction, the right of way and terminal grounds of the railway 



making. 



40 LOUIS SLOSS & CO. 

companies are valued as of the present time. He thinks that it 
is not fair to the public to establish a rate on the value of real 
property immensely enhanced by the growth of population of 
adjacent territory. He siates that rates based on 7 per cent of 
the cost of reproducing the Pennsylvania railroad system to-day 
would be absolutely prohibitive. He is of the opinion that a state 
commission, in fixing rates, must consider all the other matters 
suggested in the case of Smyth vs. Ames, 169 U. S. 464, such 
as the original cost, market value of stocks and bonds, density 
of traffic, density of population, etc. I find that all the western 
commissions are very much exercised over the cost of reproduction 
as the basis for fixing rates, particularly when the cost of repro- 
duction includes the unearned increment. This fear has been very 
much accentuated by the decision of Judge Sanborn in the 
Minnesota rate case, in which case the value of the railroads as 
found by the Master was, according to one of the Wisconsin com- 
missioners, at least 50 per cent in excess of the value as shown by 
the evidence. 

VI. 

Express Rates. 

Wells, Fargo & I went through the Commission's file in case number 121, being 
Co. obeys an investigation instituted February 15, 1910, into the rates of 
J Wells-Fargo & Company on property taking merchandise and 
general special rates or multiples thereof. The Commission made 
its order July 12, 1910, reducing somewhat the rates in effect. 
On rehearing, the Commission modified its final order by reducing 
somewhat the reductions contemplated. The express company 
thereupon complied with the order. I find that Oregon and Montana 
are probably the only states in which Wells-Fargo & Company 
has complied with orders of state commissions reducing express 
rates. In Iowa, Illinois, Indiana, Missouri and Oklahoma, the 
express companies have secured injunctions against the respective 
commissions. In the last two states, the Commissions have been 
tied up in this way for over two years. 

I read the transcript of the testimony in the Oregon case and 
looked through the exhibits, and have made notes thereon. 



order to reduce 
rate. 



REPORT OF COMMISSIONER THELEN. 



41 



VII. 

Litigation. 

On July 3, 1911, the day before I reached Portland, Judge 
Bean, sitting in the Federal Circuit Court, sustained the demurrer 
of the defendant railway commissioners in the case of Southern 
Pacific Company vs. Campbell, in which case the complainant had 
secured an injunction, restraining the enforcement of an order of 
the Commission reducing class rates in the Willamette Valley. 
Judge Bean in his opinion points out the necessity of showing the 
specific facts which are relied upon to make out a case of confisca- 
tion of property. On the question of interference with interstate 
commerce, he reaffirms the decision in the case of Oregon Railway 
and Navigation Company vs. Campbell, 173 Fed. 957; 177 Fed. 
318; 180 Fed. 253. In this latter case, Judge Wolverton 
reached a decision on the question of interference with interstate Decision at 
commerce directly at variance with the decision of Judge Sanborn variance with that 
in the Minnesota Rate Case. The Oregon case and the Minnesota 
case together with the Arkansas case will be heard before the 
Supreme Court of the United States at the October term. 

In the Portland Railway, Light and Power Company case an 
appeal has been taken to the United States Supreme Court from 
an order of the Commission reducing suburban fares out of Portland. 
In this case a state judge granted an injunction which is still in 
effect. The railway company is supposed to issue to each passenger 
a receipt for excess fare paid, the receipt to entitle the holder to 
a refund in case the order of the commission is ultimately sustained. 
Mr. Aitchison is of the opinion that in cases in which the Com- 
mission's order as to rates is enjoined by the corporations, the mere 
giving of a bond furnishes but little relief. 



in Minnesota rate 
case. 



VIII. 

Grade Crossings. 

The Oregon Commission has power under section 28 of the Commission 

statute to compel the installation of safety devices at crossings of recommends 

railroad and highways but no power to compel a separation of ?0 / s 

, t,, .... rirM^- i grade crossings. 

grades. 1 he commission in its report tor I V I U points to the great 



42 LOUIS SLOSS & CO. 

expense which is being incurred by most of the eastern states in 
order to abolish grade crossings and recommends a statute like that 
of Washington prohibiting the future construction of grade crossings 
except in cases where upon investigation by the railroad commission 
it has been found practicable to establish such a grade crossing. 
The legislature of 1911 failed to pass such a law for the reason 
that the people of the West do not seem as yet to realize the 
very great importance of the question of the abolition of grading 
crossings. Mr. Aitchison, however, is of trie opinion that the next 
legislature will pass the desired statute. 

IX. 

Complaints to Interstate Commerce Commission. 

Commission Section 47 of the Railroad Commission Act makes it the duty 
co-operates Tviin f ^ e Commission to investigate interstate freight rates affecting 

^ Oregon and to request of the railroads such changes as the Com- 

Commerce . ? Z 1 s 

Commission mlsslon mav consider necessary and thereafter, it the changes are 

not made, to apply by petition to the Interstate Commerce Com- 
mission for relief. The statute also provides that the railroads must 
file with the Commission all freight tariffs relating to interstate 
traffic. Mr. Aitchison considers this matter of complaint before 
the Interstate Commerce Commission on the part of the state 
commission to be of considerable importance. His Commission is 
row taking up with the Interstate Commerce Commission the matter 
of Interstate wool rates, affecting shipments from eastern Oregon. 
The Commission does not take up with the Interstate Commerce 
Commission matters of a merely individual or local interest, as is 
done by the Oklahoma Commission, but confines its work along 
these lines to rates affecting a considerable traffic within the state. 

X. 

Car for Track Scale Tests. 

Special car The matter of the correctness of track scales seems to be of 

transported free considerable importance in both Oregon and Washington. The 

* legislatures of both states in 1911 provided for the joint purchase 



REPORT OF COMMISSIONER THELEN. 



43 



by the two railway commissions of a car for the purpose of testing 
track scales, and for the transportation of such car free by the 
railroads. 

XL 

Long and Short Haul Clause. 

While there is no long and short haul clause in the Constitution 
of Oregon or in the Railroad Commission Act, the Supreme Court 
of Oregon has held that the provisions of the statute against undue Discrimination 
discrimination are equivalent to such a clause. The legislature prohibited by 
of 1911 accordingly granted the Commission power to authorize statute ' 
departures from this prohibition. 

When application is made for permission to deviate from the 
long and short haul clause, the Commission notifies the municipal- 
ities and commercial bodies along the line of the railroad in the 
territory affected. In only one case has the Commission granted the 
desired permission. 



XII. 

Co-operation. 

Chairman Aitchison suggests that it would be well to form a 
Pacific Coast Railway Commissioners' Association, to consist of 
the commissioners of Oregon, Washington, California, and Nevada, 
and to hold frequent conferences concerning matters which are of 
interest to all the Commissions. This suggestion is particularly 
valuable, in view of the fact that in Washington and Nevada the 
legislatures of 1911 conferred upon the state railroad commissions 
the power to regulate public utilities, while in Oregon such statute 
has been passed and will go into effect at least by November of 
next year. California, in entering upon her problem of regulating 
public utilities, can doubtlessly secure very material assistance from 
these other states. All these four states are likewise interested in 
the valuation of the Harriman lines, and should, if possible, take 
concerted action in this matter. 



Pacific Coast 

Railway 

Commissioners 

Association 

suggested. 



44 



LOUIS SLOSS & CO. 



Washington, 
i. 

Introduction. 

The Public Service Commission of Washington was created by 
statute of 191 1 to take the place of the former railroad commission, 
which was established in 1905. The Railroad Commission's powers 
were enlarged so that the present Public Service Commission has 
Jurisdiction, jurisdiction over railroad, street railroad, steamboat, express, car, 
sleeping car, freight, freight line, gas, electric, telephone, telegraph, 
water, wharfinger, and warehouse companies, except municipally 
owned plants. The statute is carefully worked out, containing first a 
general introduction, then provisions concerning the duties of each 
separate class or utility subject to the control of the Commis-- 
sion, then provisions prescribing the powers of the Public Service 
Commission as to all these companies, then provisions concerning 
procedure before the Commission and the courts, and finally provi- 
sions concerning construction and repeal and a saving clause. 

II. 

Organization and Office System. 

The Commission. — The commissioners are H. A. Fairchild, 
chairman, a lawyer of unusual ability; J. C. Lawrence; and Jesse 
Jones, a labor leader. The term of office is six years, with intervals 
of two years between expirations, and the salary of the commissioners 
Commissioners is $5,000.00 per year. The commissioners are appointed by the 
appointed, governor. The statute contains a provision to the effect that no 
commissioner shall engage in any occupation or business inconsistent 
Devote whole with his duties as commissioner. The commissioners all reside in 
time to work. Olympia, the state capital, and the Commission is in session prac- 
tically all the time. To my mind, one of the principal reasons for 
the undoubted efficiency of this Commission is the fact that the 
members, in addition to being well qualified, are on the job all the 
time. The business of the Commission is conducted promptly and 
efficiently. While I was in Olympia, several matters came up 
concerning new rates which the railroads desired to put into effect. 



REPORT OF COMMISSIONER THELEN. 



45 



The chairman of the Commission promptly telephoned to the railroad 
authorities in Seattle, found out exactly what was wanted, and 
settled the matter then and there. 

Employees. — The employees of the Commission are F. M. Salaries of 
Larned, secretary, at a salary of $3,000.00 per year; O. O. employees. 
Calderhead, rate expert, at a salary of $3,000.00; Harry L. 
Gray, engineer, at a salary of $3,000.00; an inspector of safety 
appliances, at a salary of $3,000.00; a telephone expert, at a 
salary of $3,000.00; an accountant, at a salary of $1,800.00; and 
about sixteen other employees, of whom about six are stenographers 
and ten employees of the engineer. 

Office System. — The office is divided into different departments, Departments. 
the secretary being at the head of the administrative department, 
the engineer at the head of the engineering department, and the rate 
expert at the head of the rate department. 



III. 

Physical Valuation. 

By far the most important work which has been performed by 
the Washington Commission has been the valuation of the railroads 
of the state. Section 92 of the Act of 1911, being an amendment 
of a similar provision in the earlier statute, provides that it shall be 
the duty of the Commission to ascertain the numerous items specified 
in the statute relating to the value of the railroads of the state and 
to hold a hearing thereafter to ascertain these matters, upon notice 
to the company, and then to make its findings, with the right of 
review on the part of the corporations. I read the entire first 
volume of the transcript of the testimony on the investigation into the 
value of the Great Northern and other railroads. The proceedings 
were conducted like court proceedings. Chairman Fairchild presided 
and ruled on the admissibility of evidence. The Commission, 
through the Assistant Attorney General, put Engineer Gillett and 
the other employees of the engineering department on the stand and 
through them introduced their tabulations concerning the cost of 
construction of the railroads, land values, and so on. Rate Expert 
Calderhead was then put on to testify as to rates, movement of 
traffic, cost of operation and similar matters. After the railroads 



Methods of 
investigation to 
ascertain physical 
valuation. 



46 LOUIS SLOSS & CO . 

had presented their case, the findings were prepared. As these 
findings are by far the most complete of their kind in the country, 
I wish to refer here to the nature of the findings in the Northern 
Pacific case. The Commission there made findings on the following 
facts : 

Facts on which j . Financial history of the railroad in Washington, with dates 

^ommis ? Q £ cons t ruc tion of the main and all branch lines, and the financial 
made findings as ,. , , ,. ,. 

to t>h\3sical nistor y °* tne subsidiary corporations. 

valuation. 2. Original cost of main and all branch lines. 

3. Cost of improvements and betterments. 

4. Amount allowable for discount, general expenses and 
interest during construction. 

5. Amount of depreciation of the various structures (Gillett's 
tables) . 

6. Original cost and cost of reproduction of all equipment. 

7. Cost of reproduction of all rights of way and terminal 
grounds. 

8. Property owned by railroad, but not used for operation. 

9. Character of country traversed. 

10. Density of population and traffic. 

1 1 . Sources from which capital was derived ; total bonded 
indebtedness; market value of stock and bonds over a period of 
several years. 

12. Total tonnage of freight carried in Washington for three 
years, with percentage of each commodity, divided as to state and 
interstate, with the average haul of each and the average haul within 
the state of the interstate haul. 

1 3. Total number of passengers carried in Washington for three 
years, with passenger miles; average distance, state and interstate; 
and revenue. 

14. Express, mail, and other transportation revenues. 

15. Operating divisions. 



REPORT OF COMMISSIONER THELEN. 4? 



16. Number of employees and their wages. 

17. Total present cash market value ($1 10,208,450). 

18. Cost of operation, divided into freight and passenger. 

19. Average cost per ton for moving freight; cost per ton for 
moving each of the more important commodities. 

20. Freight operating expenses, divided into state and interstate. 

21. Passenger operating expenses, divided into state and inter- 
state. 

22. Method of apportioning revenues; total for state and inter- 
state for three years. 

23. Taxes for three years. 

24. Gross earnings and expenses (probable) for year ending 
June 30, 1909. 

25. Rates on most important state commodities. 

26. Total value of property devoted to state business ($45,- 
226,464.50). 

These findings show the most thorough and painstaking work on 
the part both of the engineering and rate departments of the 
commission. Mr. Calderhead, the rate expert, is not merely 
thoroughly acquainted with rate matters, but seems also to be an 
able statistician and accountant. Most state commissions of the 
first rank have separate rate and statistical departments. 

IV. 

Engineering Department. 

I spent several hours in consultation with Engineer Henry L. 
Gray, investigating the manner in which the work of his department 
is conducted. In order to ascertain the original cost of construction 
of the railroad properties in the state of Washington, the employees Investigations of 
of the Commission went to the original records of the railway original records. 
companies and took off from them the quantities and prices. The 
engineering department never takes the railroads' figures. The 
department checks over the data furnished by the railway companies 



46 LOUIS SLOSS & CO. 

by going to the final estimates and other data, both in the office of 

the chief engineer and of the auditor. Men are also sent out into 

the field, in order to check up quantities and amounts. The estimates 

furnished by the railway companies are generally fairly correct as 

to quantities; but Mr. Gray has found it very necessary to scrutinize 

such items as can not be checked over from the books of the 

company, such as engineering expenses, legal expenses, discount, 

interest and freight. Mr. Gray prepares his reports concerning the 

Engineers different companies in very readable and attractive form. These 

reports. re p 0r t s generally contain information concerning the organization and 

financial history of the railroad, its physical features, its general 

balance sheet, original cost of construction with all details, the cost 

of reproduction with all details, and the amount of depreciation. 

The work is done in a scholarly and thorough manner, with 

considerable attention to special features of the various companies. 

Physical Mr. Gray has prepared complete reports as to the physical 

Valuation of valuation and other data of the telephone companies of Spokane and 

1 elepnone Seattle. The Commission will soon issue orders in the matter of 
Companies. . i , 

telephone rates. 

As already stated, the work of valuing the railroad properties 

has been completed. The engineering department goes to the records 

Valuations of the railroad companies from time to time in order to keep this 

constantly valuation up to date. Within a few years a new estimate as to the 

revised. CQSt Q f re p roc | uc tion will have to be made, for the reason that the 

price of labor and materials is constantly increasing. 

Mr. Gray employs some eight to ten men, who are at present 

largely engaged in ascertaining the value of some of the utilities, 

particularly telephone and electric light companies. 

V. 

Court Procedure. 

Review of Chairman Fairchild tells me that in his judgment the two most 

Commission s important provisions of the Washington statute are those dealing 

orders and w j m rev j e w of the commission's orders and review of their findings 

S ' as to valuations. Section 86 of the statute provides for a review of 

the orders and the findings of the commission, the application to be 

made to the superior court of the county in which the proceeding 



REPORT OF COMMISSIONER THELEN. 49 

was initiated. The pendency of any review shall not of itself stay 
or suspend the operation of the order of the Commission, but the 
Superior Court may, in its discretion, restrain or suspend the operation 
of the order. No order restraining or suspending an order of the 
commission shall be made except upon notice to the commission and 
after hearing, and if a supersedeas is granted, the order granting 
the same must contain a specific finding based upon evidence sub- 
mitted to the court making the order and identified by reference 
thereto, to the effect that great or irreparable damage would other- 
wise result to the petitioner and specifying the nature of the damage. 
In case the order of the Commission is suspended, the company must 
give a bond for the payment of such sums as may ultimately be 
found to have been paid by the public in excess of the rates 
specified in the order of the Commission. An appeal thereafter lies 
to the Supreme Court. The Washington statute does not contain 
the provisions to be found in the Oklahoma Constitution, to the 
effect that the appealing company must keep books showing the 
name of every person who pays a rate in excess of that specified in 
the commission's order, his address, and the amount of the excess. 

Chairman Fairchild considers the Washington plan superior to Washington plan 
that of Wisconsin, where the procedure is one to set aside the order compared T»ith 
of the Commission. If new evidence is introduced in court in Wisconsin plan. 
Wisconsin, it is certified by the court to the Commission, and the 
Commission must then pass again on the whole matter before the 
court renders its final decision. 

Chairman Fairchild was particularly enthusiastic over the pro- 
visions of section 92 of the statute, providing for a court review 
of the findings of the commission as to physical valuation, with a 
provision that the findings of the Commission as filed or corrected Effect of making 
by the courts shall be conclusive evidence in any other proceedings findin gs of 

of the facts stated in the findings as of the date therein specified. 

t i , • i i wr i • ^ •• V conclusive 

In the gram case, in which the Washington Commission made a cut ev {J ence { n Court 

of $750,000.00 annually in grain rates, the Commission introduced 

a certified copy of its prior findings as to the valuation of the 

railroads affected, and thus covered that part of its case in a minute 

or two. The evidence being conclusive on that point, the railroad 

companies could not make out a case of confiscation of property, 

and consequently did not appeal from the decision of the commission. 



50 LOUIS SLOSS & CO. 

Mr. Fairchild points out that the Minnesota Commission expended 
over $50,000.00 in securing the valuation of its railroad properties 
(about the same amount as Washington), and that when its rate 
orders were attacked, the Commission had to go into the entire 
matter again before the Master, with the result that the railways 
were enabled to introduce a mass of additional evidence which 
swamped the Master and resulted in an excessively high valuation, 
besides necessitating a very large amount of time in its presentation. 

VI. 

Service and Facilities. 

Commission The Washington statute gives to the Commission adequate powers 
provides for over matters such as service, equipment and facilities over which 
comjortoj t ^ e C a ljf orn j a Commission does not at present have jurisdiction. 
The Washington Commission has inspected each of the two hundred 
railway stations in the state and has made a large number of orders 
requiring additions or betterments in station buildings and improve- 
ments in facilities. Appeals were taken in some twenty- five of these 
cases. The Supreme Court of Washington has generally sustained the 
Commission's orders. The Commission employs an inspector of 
safety appliances and also an inspector of scales for weighing hay 
and grain. Mr. Gray, the engineer in charge of physical valuation, 
is also doing considerable work in the matter of inspecting facilities 
and equipment. 

VII. 

Public Utilities. 

When I visited the Commission in July of this year, the Com- 
mission was just entering upon its duties with regard to the 
Neto> Work of regulation and control of public utilities. The statute conferring 
Commission, these powers upon the Commission was approved in March of this 
year. The Commission had not at that time marked out its work 
in this connection, but was beginning to receive complaints concerning 
telephone rates and water rates. The Commission was also having 
some little difficulty with reference to steamship companies, particu- 
larly as to whether or not it would be necessary for them to file 
tariffs with the Commission. 



REPORT OF COMMISSIONER THELEN. 51 

VIII. 

Rate Fixing. 

The Washington Commission, although it has done pre-eminently Elements 
able work in the matter of ascertaining the physical valuation of considered in rate 
railroad properties, has, nevertheless, been careful, in fixing rates, to mal i in 8' 
consider all the elements specified in the case of Smyth vs. Ames, 
including original cost, present cost of reproduction, density of 
traffic, density of population, and the market value of stocks and 
bonds. Chairman Fairchild points out that neither the original cost 
of construction nor the present cost of reproduction are necessarily Discussion of their 
the proper basis for rate fixing purposes. He referred to two relations. 
railroads, one of them in a densely populated valley and the other 
in a sparsely settled timber country. It might well be that the 
original cost of construction, and even the present cost of 
reproduction, are the same, or nearly the same, in these two cases; 
nevertheless, it would be absurd to say that these two railroad 
properties have the same value, either for rate fixing or for any other 
purpose. Chairman Fairchild considers the Puget Sound Electric 
Railway case to represent the most advanced work of the Commis- 
sion. It is the first case in which the Commission shows in its 
findings percentage depreciation and the cost of reproduction less 
depreciation so as to ascertain present value. The Commission in 
this case followed Engineer Gillett's method of ascertaining average 
life of different kinds of equipment, salvage value, and percentage 
depreciation to be charged off each year. The order of the Com- 
mission in this case was sustained by the Superior Court on November 
14, 1910, but the case has been appealed to the State Supreme 
Court. 

IX. 

Results Attained by the Commission. 

In addition to the Commission's work in connection with the 
valuation of its railroads, it has, among other things, accomplished 
the following work: 



52 LOUIS SLOSS & CO. 



Washington '• ^ ^ as established joint rates on commodities from eastern 
Commission has Oregon to Portland, lower than the sum of the locals, thus effecting 
established: a reduction in rates amounting to about $100,000 annually. 
joint rates, 
reduced express ^" ^ nas reduced express rates on fruit and vegetables about 
rates. 20 per cent, but has made no general investigation into express 
rates. Commissioner Jones told me that the Commission felt that 
it would be very necessary to make such investigation shortly. 

general distance 3. It has prescribed a general distance tariff, thereby making 
tariff, a reduction of about $75,000.00 in rates annually. 

joint rates on 4. It has established a joint rate on wheat from Oregon 
wheat. Railway and Navigation Company points in eastern Oregon to 
Puget Sound points, but the Commission's order in this case has 
been enjoined in the federal courts. 

connecting traces. 5. It has ordered the installation of connecting tracks wherever 
one railroad intersects or terminates at or near another. The railway 
companies have appealed this case from the State Supreme Court 
to the United States Supreme Court. 

better stations. 6. It has inspected every railroad station in the state, as already 
pointed out, and has made some 200 orders requiring additional 
station facilities. 

trvelve per cent 7. It has made a reduction of 1 2 per cent on grain rates of 
reduction on the Northern Pacific, thereby effecting a reduction in rates of 
grain rates. $750,000 annually. 

reduced passenger 8. It nas reduced passenger rates on the Puget Sound Electric 
rates. Railway. This case has been appealed. 

less grade 9. It has denied the right to install grade crossings in some 
crossings. 100 cases. 

1 0. It has requested that the legislature give to it the power 
to abolish existing grade crossings. 

investigation of 11- It has engaged a telephone expert and has made a careful 
telephone investigation into the value of the telephone properties within the 
properties. s t a te, and is now seeking to ascertain whether it can order in a 
measured rate as against the present flat rate. 



REPORT OF COMMISSIONER THELEN. 53 



Nebraska 



Introduction. 

The State Railway Commission of Nebraska was created by 
amendment to the Constitution adopted on November 6, 1906. 
The legislature of 1907 thereafter adopted a comprehensive railway 
commission act. The Commission succeeded a board of transpor- 
tation which did little or nothing. The statute of 1907 was amended 
in 1911 with reference to the method of review of the decision of 
the commission. Appeals must now be taken directly to the state Appeals. 
supreme court and the evidence presented before the Commission 
can alone be considered. 

The Nebraska Commission has power to fix the rates and to' oD;ers « 
regulate the service of railroads, express, car, sleeping car, freight, 
freight line, telephone and telegraph companies. The Commission 
has jurisdiction over all railways, including steam, interurban, and 
street. The legislature of 1911 placed irrigation companies under 
the control of the Commission. 

The matter of bringing all public utilities, such as gas, light, heat, Public Utilities 
power and water companies, under the control of the Commission," 
has been discussed during the last two sessions of the legislature 
but no action has been taken. Under the stock and bond law, 
however, the Commission regulates the issues of stocks and bonds Stock an <* Bond 
of all public service corporations, including gas, light, heat, power, 
and water companies. 

II. 

Organization and Office System. 

The Commission. — The commissioners are Dr. H. J. Winnett, 
a retired physician, chairman; Henry T. Clarke, Jr., an attorney; Commissioners 
and W. J. Furse, also an attorney. The commissioners are selected e/edea. 
for six year terms with intervals of two years. They receive a 
salary of $3,000.00 per annum and devote their entire time to the 
duties of their office. 



54 LOUIS SLOSS & CO. 

A regular meeting is held every week and special meetings at 
other times during the week. Chairman Winnett disapproves strongly 
of the election of commissioners. 
Salaries of Employees. — The employees of the Commission are Clark Per- 
employees. fo nSt secr etary, at a salary of $2,400.00; U. G. Powell, rate expert 
at a salary of $2,400.00; L. E. Wettling, an accountant; E. C. 
Hurd, engineer in charge of physical valuation; a reporter; about 
four employees of the rate expert; three stenographers in the 
secretary's office; and some eleven persons employed by the engineer 
in making physical valuations. 

Office System. — Secretary Clark Perkins showed me his office 
for detail. His largest correspondence is in connection with informal 
Statistical complaints. These are filed in card board folders which have 
Department, endorsed thereon the necessary data to show the nature and disposition 
of the case, and may be reached through a triple card index. 
One index refers to the complainant's name; another to the name of 
the city; and the third to the defendant's name. The same index 
covers formal complaints as well. Formal cases are filed in flexible 
card board envelopes and the exhibits are filed in boxes in the vault. 
Applications for approval of changes in rates, stock and bond issues 
and other matters are all filed together in envelopes similar to those 
used for informal complaints and are indexed separately. The next 
largest class of correspondence is with the telephone companies, of 
which there are over six hundred in Nebraska. Mr. Perkins has 
a separate file for each of these companies. All other correspondence 
is treated as miscellaneous and is filed alphabetically, except corre- 
spondence with other commissions, which is separately filed. Mr. 
Perkins has in his desk two books, one for informal complaints and 
the other for applications. As each complaint and application comes 
in, a number is assigned to it in these books. 

After the board meetings, the secretary himself dictates the entire 
minutes. He then pastes them into a book from which they are 
later copied into the regular minute book, after having been corrected 
and approved. The original minute memorandum book is preserved. 



REPORT OF COMMISSIONER THELEN. 55 



III. 

Stock and Bond Law. 

House Bill No. 578, Laws of 1909, gives the Commission Commission passes 
authority to pass on all proposed stock, bond and note on proposed 
issues of all public service corporations incorporated or security issues. 
hereafter incorporated under or by virtue of the laws of 
Nebraska, said bonds, stocks and notes to be issued only 
for the "acquisition of property, the construction, comple- 
tion, extension or improvement of facilities, the improve- 
ment or maintenance of service, or the discharge or 
refunding of obligations." 

While the language of the statute is limited to Nebraska foreign 
corporations, all public service corporations doing business corporations 
in the state submit their proposed stock and bond issues submit security 
for the Commission's approval, so as to remove clouds on lssues 
the issue and give additional stability thereto. The Mis- 
souri Pacific Railway Company, for instance, recently 
secured the Commission's approval of a twenty million 
dollar bond issue. 

Applications for approval are made on blanks furnished Applications. 
by the Commission, showing in detail assets, liabilities and 
purposes of issue. The largest number of these applica- 
tions have come in from telephone companies.. The 
Commission usually approves the applications as a matter 
of form and enters an order approving the issue, specifying 
the purposes for which the proceeds may be used and 
directing that the corporation render to it on blanks fur- 
nished by the Commission an account of all moneys 
received from the sale of the stocks and bonds and of the 
purposes for which the money was actually expended. I 
consider the control of stocks and bonds and other secur- 
ities to be one of the absolutely essential duties of a 
railroad or public service commission, and shall discuss 
the matter in greater detail in connection with the work of 
the Wisconsin, New York, and Texas Commissions. 



56 LOUIS SLOSS & CO. 



IV. 

Telephone Companies. 

Information The Commission has prescribed a set of forms to be filled out 

required of by telephone companies, showing exchange rates, toll rates and added 

service to connecting exchanges, and has also prescribed a system 

companies. . 6 ° • .„ . , , . , , f. , , 

or accounting, rererence to which will be round in the published 

reports. A large number of so-called farmers' telephone companies 

exist in the state. 

V. 

Electric Street Railways. 

Street railways The Commission has control over these railways and has had 
give trouble, more trouble with them than with any other kind of corporation. 
The cities of Omaha and Lincoln are the only cities in Nebraska 
having such companies. The case of City of Havelocf? vs. The 
Lincoln Traction Company, 1910 Nebraska Railway Commission 
Reports, page 98, took up a very considerable amount of the 
Commission's time. 

VI. 

Rate Litigation. 

The rate The legislature of 1907, at the time of enacting the present 
legislature results Railroad Commission law, also passed statutes (1) reducing express 
i... .. rates 25 per cent; (2) establishing a maximum 2 cent passenger 
fare; and (3) establishing commodity freight rates. Each of these 
statutes was attacked in the courts. The Railway Commission 
secured from the State Supreme Court a decision upholding the cut 
in express rates. The United States Express Company has recently 
appealed the case to the United States Supreme Court. 

The passenger and commodity freight rate cases were removed by 
the railroad companies from the state to the federal courts, which 
courts issued restraining orders under which the railways have 
continued to charge their former rates. These cases are good 
illustrations of the length of time appeals from orders of railway 
commissions may remain in the courts. They were brought in 1907 



REPORT OF COMMISSIONER THELEN. 57 

and have not yet been tried. Rate Expert Powell has spent a very 

considerable amount of labor in preparing the state's exhibits in 

these cases. They are prepared on the cost accounting theory. Mr. Cost accounting 

Powell has made segregation of passenger train and freight train theory. 

operating expenses as to each of the accounts prescribed by the 

Interstate Commerce Commission. He and the entire Nebraska 

Commission are of the opinion that the recent decision rendered by 

Judge Sanborn in the Minnesota rate case is unfair to the state in 

the matter of the segregation of state from interstate operating 

expenses. Mr. Powell seems to be a rate expert of very unusual 

ability. 

Because of the passenger and commodity freight rate cases, the 
Commission has been unable to issue any further orders reducing 
passenger or freight rates. The rate department made a very 
thorough investigation into class rates and issued a tentative order 
continuing first class rates as established, but establishing the spread 
on a fixed basis. In order to secure the necessary data for the Methods of 
order, rate expert Powell employed a force of thirty girls, who securing ^ 
copied data from each intrastate waybill issued by the Rock Island in ' 0) 
and Union Pacific during the months of July and October, 1908, 
and January and April, 1909. Mr. Powell showed me the bound 
volumes, of which there must have been about thirty, containing this 
information, by stations. The record as to each waybill shows both 
the compensation which the railroad companies received and that 
which they would have received had the order gone into effect. 
This work cost the Commission some $5,000.00. The Commission 
did not finally put the order into effect, for the reason that it feared 
that such action would prejudice the cases already pending in the 
federal courts. 

The experience of the Nebraska Commission and of other com- Policy discussed. 
missions, such as Oklahoma, shews that if the railway companies 
can once get a number of important rate cases into the courts, the 
hands of the Commissions are very largely tied, not merely as to 
the subject-matter cf these cases but also as to all other rate 
matters. There is always the fear that reductions in other rates, 
while these are pending in the courts, will create in the minds of 
the federal judges an impression that the Commission is a radical 
commission which is making excessive reductions in rates. 



58 LOUIS SLOSS & CO. 



VII. 

Monthly Reports from Railroads. 

The Commission receives from each railroad of the state for each 

month a report on printed forms prescribed by the Commission, 

Detailed reports showing for each station the following information as to interstate 

of business kept business, both that which is shipped from and received at each 

at each railroad station — cars of wheat; cars of corn; cars of grain products; cars 

of live stock ; other car loads ; pounds L. C. L. ; pounds C. L. ; 

revenue L. C. L. ; revenue C. L. ; passenger ticket sales. The 

same information is also given as to intrastate business, and the 

amount thereof is then appropriated to the state of Nebraska on a 

mileage basis. This information is important as showing the amount 

of business done at each station, particularly if a question arises as 

to the adequacy of station buildings and facilities at any particular 

point. 

VIII. 

Annual Reports. 

Section 9 of the Nebraska Act prescribes a large number of 

facts which must be shown in the annual report. In order to secure 

Interstate the necessary facts from the railroads, the Nebraska Commission 

Commerce uses the Interstate Commerce Commission form as a basis. In 

Commission addition to the information required therein, Mr. Powell has forced 

' i S . the railroads to furnish the total number of passengers and revenue 
as basis. , . f . , . . , x . . 

and the total volume or rreight and revenue moving; {a) entirely 

within the state; (b) originating within and moving out; (c) 

originating without and moving into; (d) moving entirely through 

without originating or terminating within. A large number of 

commissions, following the example of Nebraska, use the Interstate 

Commerce Commission form of railroad reports as a basis, and then 

add certain requirements. 



REPORT OF COMMISSIONER THELEN. 59 



IX. 

Form of Accounts. 

The Nebraska Commission has prescribed no form of accounts, No special form 
except for telephone companies. Mr. Powell said that the Com- °f a cc °ums 
mission had not done so for the reason that if any controversy ^ 
arises, the Commission will have to go into the company's books 
anyway. In this respect Nebraska differs very materially from some 
of the best commissions in the country, such as those of Wisconsin 
and New York, which have prescribed systems of accounts for 
practically all the railroads and public utilities and which lay great 
stress on this feature of their work, and have established extensive 
and efficient statistical and accounting departments. 

X. 

Physical Valuation. 

A statute approved April 5, 1 909, provides that it shall be the Methods used to 
duty of the state railway commission to ascertain the physical ascer ^ a } n physical 
valuation of each railroad, railway, telegraph, express, telephone, 
and stock yard company within the state, and that it shall make 
findings as to the total value of each railroad, ere, the number of 
miles of railroad and the average value of line or track. The Nine designated 
statute also prescribes some nine designated elements, the sum of elements 
which shall constitute the physical valuation. These elements are j c ^ nsi . ere m 
not in all respects identical with those which are prescribed by the 
Interstate Commerce Commission. The statute shows the danger 
of having the legislature go L.o the details of a question which is 
still largely in a formative stage. It would have been far wiser, 
in my judgment, to have provided simply that the Commission 
should ascertain the value of the properties of the companies 
specified. The Commission could then go ahead and secure light 
from every possible source and be guided by the court decisions 
which are appearing from time to time on this question. 

Acting under this statute, a force of some twelve men, under Field work of 
Engineer E. C. Hurd, has been at work since 1909. The engineers. 
Commission prepared forms on which data was to be written by 
the railway companies and secured from them complete profiles, 



60 LOUIS SLOSS & CO. 

station plats, drawings, and designs. This data has now been 
furnished by all of the railroads except the Union Pacific and the 
Burlington. The Commission's engineers check over the quantities 
from the profiles which are furnished, but do no actual checking 
of quantities in the field. They also ride over the line to check 
up certain physical features, such as stations and other buildings, 
crossings, telegraph poles, fences, rails, general character of the land, 
and character and importance of towns. 

The valuation of the lands was found to be the most difficult 
' task. The greatest point of controversy between the railroad com- 
missions and the railroads in all the states is the question as to how 
the right of way and terminal grounds of the railroad companies 
shall be valued. The Nebraska Commission first sent out post 
Methods of cards to the leading bankers, public men and farmers of the 
appraisement, different counties, asking their opinion as to the value of land of 
different designated kinds in their counties. Abstract companies 
were then paid 10 cents apiece for reports as to sales of land within 
a year or two in the vicinity of the right of way. A general 
inspection was then made of the right of way to ascertain whether 
it was better or poorer than the general run of land in the 
neighborhood. Inspection was also made to determine how much 
more a railroad would have to pay above the value of surrounding 
land by reason of the cutting up of farms and damages to property 
not taken. Minnesota found an average multiple of three and 
applied that multiple. Nebraska applied different multiples as 
conditions varied, ranging from one and twenty-five hundredths in 
cities to over three in the country, but averaging two and six-tenths 
in the country. This question as to whether any multiple should 
be used, and if so what multiple, is one of the most important 
questions in connection with securing a physical valuation. 
Depreciation of Probably the best work which has been done by the Nebraska 
engineering department has been its work on the depreciation of 
equipment. To ascertain the depreciation of freight cars, the 
engineer went to the railroad car accounting records and looked 
over some fifteen thousand cars of various kinds to find out when 
they were discarded or rebuilt or wrecked or put into work train 
service, and then drew a curve showing the results of his tabulation, 



REPORT OF COMMISSIONER THELEN. 61 

and thus ascertained the average length of life of each type of car. 
Similar work was performed with reference to passenger train cars, 
engines, work equipment, rails and ties. 

The engineer found the items returned by the railroads in accounts 
1 to 33 of the Interstate Commerce Commission to be about right, 
but found it necessary to make very material reductions in the 
accounts covering general expenses, legal expenses, transportation of 
materials, equipment, interest and commissions. 

After receiving the report of its engineer, the Commission notifies Owner may 
the owners of the property and sets a time not less than thirty protest valuation. 
days nor more than sixty days, for appearance by the owner, at 
which time he may show cause why the valuation as found by the 
Commission should be altered. The state contains no provision 
as to the effect of the Commission's findings nor as to the purpose 
for which the valuations are to be used. 

The findings of the Commission with reference to the valuation 
of the first of the railway companies simply recite, in accordance 
with the provisions of the statute, that on July 1 , 1910, the value 
of the road was a certain sum, its mileage so and so much and its 
value per mile so and so much. 

XI. 

Attitude Toward Physical Valuation. 

The Nebraska Commission regards the cost of reproduction of Attitude of 
railroads, as a basis for fixing rates, somewhat in a light of a Commissioners 
hot potato, especially since Judge Sanborn in the Minnesota case e ™ 
held that the railroads are entitled to a 7 per cent return on the 
extremely high cost of reproduction found in that case, ignoring 
the other elements suggested in Smyth vs. Ames. The commissioners, 
when I asked them what they were going to do with the valuation 
when they ascertained it, said that they did not know. Because 
of Judge Sanborn's decision and of the uncertainty as to what test 
the United States Supreme Court may ultimately establish as the 
proper basis of fixing rates, the Nebraska Commission seems to 
assume a half-hearted attitude towards the entire question of physical 
valuation. 



62 LOUIS SLOSS & CO. 



XII. 

New Procedure on Appeal. 

The legislature of 1911 amended section 7 of the Railway 
Commission Act by providing that proceedings to reverse, vacate or 
Evidence taken modify orders of the state Commission shall be brought directly 
before the - m ^ Supreme Court of the state; that the evidence taken before 
alone considered ^ ie C° mm * ss i° n sna ^ alone be considered ; that the time of appeal 
in appeal. s ^ a ^ ^ lirnited to three months and that no order shall be held 
up without the filing of a supersedeas bond to be first approved 
by the Commission. These provisions are in line with those con- 
tained in the most recent statutes, except that they are not as 
complete or as far-reaching as those now obtaining in Washington, 
Wisconsin and Oklahoma. 

Commissioner Clarke told me that in his opinion there is no 
doubt, as the constitution of Nebraska now stands, that these 
provisions are valid. The first test of these provisions will probably 
be made in connection with an order of the Commission directing 
the erection of a brick station building at Wayne. A request by 
the railroad for a certified copy of the proceedings before the 
Commission in this matter came in while I was visiting the 
Commission. 

XIII. 

Changes in Schedules. 

Commission must The statute provides that the carriers shall file with the Com- 
approverate m j ss ; on a U me j r schedules of rates in effect on January 1, 1907 
(this being before the date of the statute), and that thereafter 
no rate shall be changed, either raised or lowered, without the 
Commission's consent. Dr. Winnett thinks that this is a salutary 
provision and that it tends to produce stability of rates. Hie 
Commission approves reductions almost as a matter of course, but 
almost always holds a hearing in cases of a contemplated increase. 



REPORT OF COMMISSIONER THELEN. 63 



Minnesota. 



Introduction. 

The Railroad and Warehouse Commission of Minnesota was 
created by act of 1 899. The Commission has jurisdiction over all Jurisdiction, 
railroads except street railways (in so far as relates to the carriage 
of persons and property wholly within the limits of a municipality) 
and also over all express companies and public warehouses, including 
commission houses and grain elevators. The Commission does not 
have control over public utilities. A proposition to extend the 
jurisdiction of the commission over such utilities was presented to 
the last legislature but was defeated by the rural telephone com- 
panies, who objected to the clause giving to the Commission power 
to order in physical connections between telephone companies. 
Commissioner Elmquist was of the opinion that a public utilities 
statute containing the telephone physical connections clause would 
be passed by the next session of the legislature. 

Minnesota does not have a stock and bond law nor a public 
convenience and necessity law. The work of the Commission is 
limited to the fixing of rates and the regulation of service of 
railroads and express companies and public warehouses, as above 
indicated. 

II. 

Organization and Office System. 

The Commission. — The commissioners are Judge Ira B. Mills, 
chairman, Charles F. Staples, and Charles E. Elmquist. Judge 
Mills is a lawyer and has been a member of the Commission for 
more than ten years. Mr. Staples is a farmer, a man of considerable 
dignity and apparently much ability, and has also served more 
than ten years. Mr. Elmquist is a younger man, a lawyer, energetic 
and apparently well posted, and has been a member of the 
Commission about four years. 



64 LOUIS SLOSS & CO. 

Commissioners The commissioners are elected for a term of six years, and 
elected, receive a salary of $4,500.00 per annum. They devote their 
entire time to the duties of the office, and are in the office every 
week day, except when one of them is out on an inspection tour. 
Commissioner Elmquist was strongly opposed to a board of five 
members for the reason that three can do much better executive work. 

Personnel of Employees. — The employees of the Commission are A. C. 

Commission. Clausen, secretary, who attends largely to the warehouse business 
of the commission and prepares a part of the annual report; Thomas 
Yapp, assistant secretary, who attends to the details of the rail- 
road and express work of the Commission and is an active and 
capable man; D. J. Jurgensen, engineer in charge of physical 
valuation; one rate clerk (but no rate expert); two clerks and 
three stenographers. The act of April 13, 1911, appropriates the 
sum of $30,000.00 for the annual expenses of the Commission. 
This does not include the amount of money expended in the 
Minnesota rate case. 
Orders Office System. — But little attention is paid by the Commission to 
informal, the matter of office system. No minutes are kept. Orders are 
prepared informally and sent out by letter. Most of the business of 
the Commission is done informally in the office. Schedules of rates 
are filed by railroads and are indexed in a book. Mr. Yapp 
prefers a book to a card system by reason of its greater permanency. 

III. 

Express Investigation. 

Investigation of I went quite thoroughly into the investigation which the Minnesota 
Wells, rargo Commission has been conducting into the express rates of Wells- 
- ' ex P ress Fargo & Company. The Commission was told by Wells-Fargo 
& Company that they could not secure the information which they 
desired except by sending a force of men to the New York office 
of the express company. The Commission, accordingly, sent a 
number of men to New York, where they spent something over a 
year in going over all the waybills covering a period of two months. 
Mr. Yapp showed me the books — about nine feet of them — into 
which the transcript of the records of the Exp re: s Company in 
New York was made. These books contain spaces for the names 



REPORT OF COMMISSIONER THELEN. 65 



of the places of origin and destination of each package affecting 
Minnesota business, and also columns for the different rates; thus, 
a, b, c, d, e, 10, 15, etc., up to and including 100, and separate 
books for the special rates on poultry, milk, laundry, beer, and a 
few other commodities. There are also separate books for inter- 
state, intrastate, intra-interstate, and inter-intrastate shipments. Hie 
books also show the revenue derived, the number of transactions 
and number of packages and, in the case of the interstate business, 
the amount of the revenue chargeable to Minnesota. This amount 
is ascertained on the * 'rate-prorate" basis; i. e., the rate from 
the outside point to the Minnesota gateway through which it passes 
is to the rate from the Minnesota gateway to the Minnesota point, 
as the earnings received by the express company are to the amount 
of earnings assigned to Minnesota. The receipts from money 
orders, custom house brokerage, and similar items were taken off 
for the whole system, and a proportion of them was then allocated 
to Minnesota. 

The Minnesota employees went through some nine million way- 
bills in New York City to ascertain those affecting Minnesota 
business, and found some 125,000 for the month of August, 1909, 
and 225,000 for the month of December, 1909. Wells-Fargo & 
Company likewise had a force of men examining the same waybills. 
Mr. Yapp told me that this work had cost the Minnesota Com- 
mission some $30,000.00. It is the most thorough work which 
has been done in this country in the matter of express investigations. 

The testimony concerning the express end of the business had 
all been presented when I was in St. Paul, and I read over the 
entire transcript. The express company presented no evidence. I Express company 
have no doubt whatsoever that the express company is simply presented no 
waiting to tie the hands of the Commission in the courts. The c 
Minnesota Commission is also examining the railroad end of the 
express business, and will take testimony as to this matter before 
finally deciding the case. I examined carefully all the exhibits 
introduced by the state, for the purpose of using this information 
in our own express investigation. 

The results secured by the Minnesota Commission showed that Result of express 
the express company was making a profit of some 1 8 or 1 9 per cent rate investigation. 



66 LOUIS SLOSS & CO. 

W^— ^"^— ^— ^i— — i"^»— ^— a^— — ■— 

on that part of its property which could fairly be chargeable to its 
state business, and some 74 per cent on that part of its Minnesota 
property which is chargeable to the interstate business. 

IV. 

Minnesota Rate Case. 

Most famous The legislature of 1907 passed a 2 cent maximum passenger 

rate case. f are j aw anc j a max imum commodity freight law. The passenger 

rates went into effect, and the freight rates were about to go into 

effect when stockholders of the railroads affected secured an 

injunction from the federal courts. The matter was thereafter 

referred to Commissioner Otis as referee. After taking some twenty 

volumes of testimony and going into the entire matter of valuation 

of the Minnesota railroads de novo, regardless of the finding of 

the Minnesota Commission therein, Commissioner Otis rendered a 

report which was affirmed by Judge Sanborn in the now famous 

Decision Minnesota rate decision. Judge Sanborn disregarded every basis 

disregarded of rate fixing except that of the cost of reproduction of the prop- 

1 erty and found a cost in this case, which, according to the general 

.. ^ j consensus of opinion, is at least 50 per cent in excess of the cost 

reproduction. . , . , • , T t i r i 

as shown by the evidence in the case. He also round an inter- 
ference by the proposed state rates with interstate commerce, 

The Minnesota Commission, as well as the other Northern and 

Middle Western Commissions which I visited, are very much 

exercised over the Minnesota rate case. I had a talk with Judge 

O'Brien, who is handling the case for the state before the United 

States Supreme Court. He told me that the motions to hear the 

Oregon, Missouri, and Arkansas cases contemporaneously with the 

Great difference Minnesota case at the October term had been granted. Judge 

between original O'Brien pointed out the enormous variance between the original 

cQst and present cost anc j t ^ e p resen t; assigned value of the railroad properties 

i .• involved in the case. He regards the four hundred foot strip of 

discussed. "§ nt °^ wav acquired from the government as a franchise on 

which the railroad is not entitled to a return. He also denies the 

right of the railroads to multiply the present market value of the 

land by a multiple to represent the increased cost of securing the 

same. Judge O'Brien thought that he saw a preconcerted plot on 



REPORT OF COMMISSIONER THELEN. 67 

the part of the railroads to urge on a number of the state com- 
missions to adopt the cost of reproduction as the basis of rate fixing. 

The Minnesota commissioners pointed out to me that as to more Value of 
than half of the railroads of the state, the value of the stock securities 
and bends is greater than the Commission's estimate as to the , p . 
value of the properties, but is less than the cost of reproduction as ff rot>er il es 
returned by the railway companies. To meet the decision in the 
Minnesota rate case, the legislature of 1909 passed a statute 
providing that whenever a common carrier resists the enforcement 
of an order of the Commission prescribing rates, it shall be the 
duty of such carrier to keep an account of every charge made 
by it for any service to which such rates apply, showing in each 
case the name and address of the consignor and consignee, the 
date of the transaction, the stations between which the business 
was carried, and the amount actually charged, and that which 
would have been charged under the rates prescribed by the 
Commission. A report containing these matters must be made to 
the Commission every month. Within sixty days after the final 
determination of the proceedings, the carrier must pay to the 
Railroad and Warehouse Commission, for the benefit of the parties 
entitled thereto, all sums collected by it in excess of the rates 
finally prescribed by the court, with interest, and the Commission 
thereupon pays out these moneys to the parties entitled thereto. All 
amounts not claimed are paid by the Commission into the state 
treasury for the benefit of the general revenue fund. Under this 
statute, the railroads involved in the Minnesota rate case are now 
keeping books and making returns to the Commission. 

In concluding this subject, I would say that the Minnesota 
Commission is even more exercised over the decision with reference 
to the rate fixing basis than over that part of the decision which 
refers to interference with interstate commerce. 

V. 

Federal Courts. 

One of the greatest difficulties facing certain of the state com- Efforts to hamper 
missions in districts in which the federal judges seem to be Commission. 
unfriendly, is the facility with which the corporations can secure 



68 



LOUIS SLOSS & CO. 



from such judges restraining orders and temporary injunctions tying 

the hands of the Commission for several years, until the cases are 

Litigation determined. However carefully a statute may prescribe the 

should be procedure in cases on appeal from the orders of the Commission, 

the federal courts are not bound by such provisions and proceed 



tried in 
State courts 



fi rs l according to their own rules. Chairman Mills, while chairman of 
the committee on legislation of the National Association of Railway 
Commissioners, accordingly presented, and the association adopted, 
a resolution to be adopted by the different state legislatures, calling 
upon their representatives in congress to pass a statute providing 
that litigation affecting state railway and public service commissions 
should be carried through the state courts first before being taken 
into the federal courts. The Minnesota legislature passed such a 
resolution, but no other state has done so. 



VI. 

Changes in Rates. 

Changes must Changes in rates become effective on ten days' notice, but only 
be approved by if approve d by the Commission. Mr. Yapp thinks it a wise 

Commission. . • i_ «r r^ • • l • * 

provision to have the Commission approve every change in rates. 

He considers this method a very desirable one for the reason that 

the Commission in this way secures a whip handle. 

Reductions in rates are allowed as a matter of course, but if 

they affect common points Mr. Yapp generally telephones to the 

other companies affected and asks them if they wish to put in 

the same rate. This is done in a spirit of fairness to prevent one 

railroad from securing an advantage over others by means of 

* 'midnight tariffs." 



VII. 

Grade Crossings. 

The statutes of Minnesota do not give authority to the state 
recommends . . .. f , . . 

abolishment Commission to prescribe a separation or grade crossings. Mr. 

of Prade Yapp told me that these matters were taken care of by the city 

crossings, authorities and that no authority to order a separation of grades 



REPORT OF COMMISSIONER THELEN. 69 



exists as to those portions of the state which are outside of city 
limits. He thinks it well to handle the problem while it is in its 
infancy, as proposed in California. 

VIII. 

Physical Valuation. 

I had a long talk with Engineer Jurgensen with reference to Enormous amount 

the work of the Commission in ascertaining the value of the °f work m 

railroads of Minnesota. This work took about three years. The asceramm s 

_ . . . . r , . , , physical valuation 

Commission employed some two to titty men, with an average or * Ta {\ roa ^ s% 

about sixteen to eighteen. During the first year, but little was 

accomplished. It was found impossible to ascertain the original 

cost of construction. The railroad companies furnished to the 

commission information concerning the present value of their systems. 

The chief work of the engineering department of the Commission 

consisted in checking over these returns. To ascertain the value of 

the rights of way of the railroads, abstracts of sales in the vicinity 

were taken from the records. A total of about 1,500,000 sales 

were examined by the Commission in reaching its conclusions. 

Considerable difficulty was encountered on the question as to 

how to estimate the cost of reproduction. The railroads contend 

that this means the cost of acquiring the lands as of to-day and 

that they are entitled to multiply the present real value of adjacent 

lands by some multiple such as the figure three in order to ascertain 

the present cost of reproduction. The Commission denies the right 

to use such a multiple. The Commission accordingly prepared 

valuations on both theories. 

None of the railroads made returns as to the present value of Railroads simply 
their properties. Their returns were simply as to the cost of re P 0T * co 
reproduction. It is impossible for the Commission, by reason of 
the age of the railroads, to ascertain the original cost, otherwise it 
certainly would have done so. 

The statutes of 1909, chapter 147, provide that the Commis- 
sion shall at all times keep up the physical valuations of the rail- 
roads of the state. Under this statute the engineer sends out each 
year forms for additions and betterments and deductions. 



70 LOUIS SLOSS & CO. 



IX. 

Form of Accounts. 

Railroad Chapter 327 of the Laws of 1911 makes it the duty of every 
accounts must railroad to keep its accounts in such form as to show the total 
revenue and the total operating expenses connected both with local 
' and through traffic, the number of tons of freight carried one mile 
both on local and through trains and the total car, engine and 
other mileage of both interstate and intrastate freight. The Com- 
mission is now engaged in working out the form of these accounts. 
There is no doubt in my mind that this statute is the direct result 
of the decision in the Minnesota rate case and that its purpose is 
to force the railroad companies to keep their accounts at all times 
in such condition as to enable the state commission to secure readily 
the information necessary in case any of its orders fixing rates are 
attacked. 

X. 

Service and Facilities. 

Service matters Considerably over three-fourths of the present work of the 
quickly settled. Commission deals with matters affecting service and facilities. 
About 95 per cent of these matters are settled informally by 
drawing them to the attention of the railway company affected. 
This experience of the Minnesota Commission emphasizes the 
necessity of giving the State Railroad Commission control over 
these matters in addition to the control of rates. 

XI. 

Interstate Commerce. 

Commission The Commission takes up with the railroads a large number of 
represents people ma tters affecting interstate commerce and settles most of them 
before Interstate i n f orma ij v# j n tn j s waVj t ^ e Commission performs a great service 
Commission ^ or ^ e c ^ zens °f Minnesota. If the matter is one of public 
importance, the state Commission files the petition with the Inter- 
state Commerce Commission, appears as party complainant and 
conducts the litigation at the expense of the state. 



REPORT OF COMMISSIONER THELEN. 71 



XII. 

Accident Reports. 

Whenever an accident occurs in connection with railroad opera- Accidents must 
tion, the railroad company at once telephones or telegraphs to the °e reported at 
Commission; then follows a preliminary accident report and later c 
a final report. These reports are kept in a large file arranged 
consecutively by numbers. An index kept in a large book shows 
the name of the town or city, the name of the person, the date of 
telegraphic or telephonic report, the date of the second and third 
reports and the number of the case. These reports are entered 
by railroads and are arranged alphabetically. 

XIII. 

Litigation. 

The legislature of Minnesota in its sessions for 1905, 1907, Discussion of 

1 909 and 1911, passed a large number of special acts affecting advisability of 

the Commission. Nearly all of these acts deal with matters of granting general 

detail as to which, in my judgment, it would have been wiser to r 

,*.. !-• -i Commission. 

have given general powers to the Commission. For instance, special 

acts were passed to provide that railroads must use the same names 

for stations as the names of the cities within which the stations 

are located; that the time of the arrival of passenger trains must 

be bulletined; that the commission shall have jurisdiction over track 

scales; that the commission shall have authority to keep up 

physical valuations from year to year; that railway companies 

shall clean ditches and culverts along roadbeds, etc. The difficulty 

which Minnesota has had with these matters would seem to show 

the wisdom of giving to the Commission general powers by statute 

over all matters affecting the rates and service of the public service 

corporations affected. The Commission can then work out the 

details in such manner as experience may show to be wise. 



74 LOUIS SLOSS & CO. 

in the work of service and field inspection. This work also is 
subdivided, Mr. Cadby having charge of gas, electric and tele- 
phone inspection, Professor Mack of the water plants, etc. 
Statistical The statistical and accounting department is headed by Mr. 
Department. Edwin Gruhl, who has immediate charge of the statistics and 
accounts of the public utilities, while Mr. Schneider has charge of 
similar work in connection with railway and express work. Mr. 
Hogan and one assistant have charge of railway and express 
tariffs. Some five or six men in the department are occupied all 
the time with matters in controversy before the Commission and 
special problem work. 
Duties of Office System. The secretary receives and distributes all mail. 
Secretary. All letters when answered are returned to him and he sends out 
the answers in the name of the Commission by himself as secretary. 
All formal and informal complaints are separately numbered and 
filed both as to railroad cases and public utility cases. A separate 
file is also kept for all applications, such as for leave to issue stock 
and bonds and to build extensions. An alphabetical file is also kept. 

III. 

Procedure on Appeal. 

The Wisconsin Railway and Public Utilities acts both provide 
for an action in the Circuit Court of Dane County to set aside the 
New evidence orders of the Commission. If any new evidence is presented, the 
may be court must certify the case back to the Commission, which then 
introduced into rev j ews ; ts orc [ er [ n tne lj gnt Q f the new evidence, and thereafter 
returns its findings to the court. An appeal directly to the Supreme 
Court was not provided for, because of a constitutional difficulty 
involving a question whether an appeal would lie directly to the 
Supreme Court from an administrative board. The legislature of 
1911 passed an amendment to the Railway and Public Utilities 
acts providing for notice to stockholders and bondholders, by 
publication, in case of the acquisition of a public utility by a 
municipality, so that they might have their day before the 
Commission. Mr. Roemer is of the opinion, under the Prentiss 
case, 211 U. S. 2 1 0, that if the state statute provides the procedure 
for an appeal, with power on the part of the court to revise the 



REPORT OF COMMISSIONER THELEN. 75 

rate, that procedure must be followed before the case can go into 
the federal courts. Mr. Roemer prefers the Wisconsin procedure 
to the right of review provided by the Washington statute, for 
the reason that he doubts the applicability of a writ of review to a 
case in which the Commission is authorized to consider evidence 
extraneous to the record. This objection has not prevailed in other 
states, such as New York, Nebraska, and Oklahoma, in which 
the remedy is review, and in which no point has ever been raised 
to the effect that this is not the proper remedy. The New York 
Commission, however, is careful to put into the record all the 
evidence, so far as possible, which was in any way considered by it. 
Mr. Roemer states that the practical effect of the Wisconsin 
procedure is to force the corporations to apply for a rehearing before 
the Commission — this rehearing being granted as a matter of course. 

IV. 

Rate Fixing. 

The rate fixing basis of the Wisconsin Commission, as explained 

to me by Chairman Roemer and Commissioner Erickson, is the 

cost of reproduction of the properties affected, subtracting deprecia- £l emen t s US ed in 

tion and adding an amount for going concern value. In deter- fixing rates. 

mining the present value, the Commission disregards density of 

traffic, density of population, and market value of stocks and bonds. 

In response to a suggestion that the Oregon, Nebraska, and 

Minnesota commissions were very much concerned over the physical Discussion of 

valuation basis for rate fixing and to the possibility of an unreason- methods of 

able increase in rates resulting from increase in land values, Chair- as . ce . al , in °, ,. 

r, -Til 11 i • • e • • physical valuation. 

man Koemer said that he could not see the justice or permitting 

an increase in land values to owners adjacent to a railroad and 

denying the railroad a return on its own increased value. He 

admitted, however, that a real problem arises from the great increase 

in the value of terminal property and also that a limit will have to 

be placed on rates based on increasing land value. Very few of the 

Commissions seem to have thought as far as this, and none of 

them to have reached a solution. Chairman Roemer believes that a 

railroad or utility is entitled to a rate of six per cent on its market 

value, this being usually sufficient for five per cent interest on its 

bonds and seven per cent on its capital stock. 



76 LOUI S SLOSS & CO. 

^^^^ ■^^— ^— — —— — ^ — — 

/fofe multiple The rate multiple hitherto used by the Wisconsin Commission 
2 J-2. has been two and a half. Commissioner Erickson has serious doubts 
as to whether any amount ought to be allowed over the value of the 
adjoining property. He seems to differ from Chairman Roemer as 
to whether a railroad should be entitled to a return on rights of way 
granted by federal or state governments, Mr. Roemer being of the 
opinion that a return should not be allowed, while Mr. Erickson 
favors a return to make up for the first lean years of operation. Hie 
Commission never allows a return on franchise values except to the 
extent that a railroad or utility actually paid for the franchise. 
The Buell Formal case No. 32, known as the Buell case, shows clearly the 
case, rate-making theory of the Commission, and is probably the most 
important case which the Commission has decided. The bases there 
laid down were followed by the Federal Post Office authorities 
when they asked for information from the railway companies as to 
revenue and cost of operation of all kinds of passenger train business, 
including particularly the mail business. 

V. 

Stock and Bond Law 

Issues of Chapter 576 of the Laws of 1907 provides for the 

securities must approval of the Commission before any public service 

e approved by cor p 0rat i on can i ssue stock, stock certificates, bonds, notes, 

or other evidences of indebtedness, payable not less than 

one year from date. This statute gave the Commission 

no discretion as to approval and no power to impose 

conditions, nor did it specify the purpose for which the 

money was to be used. I understand that these matters 

were all remedied and the powers of the Commission 

materially enlarged by an act of the legislature of 1911, 

adopted just before I reached Madison. 

Foreign Foreign corporations owning railroads and utilities in 

corporations Wisconsin consider themselves bound by the law. The 

come under the g enera i i aw Q f Wisconsin has for some time provided for 

a fee to be paid on an increase of capital stock, but has 

never contained a provision for a fee on an issue of bonds. 

Another act of the legislature of 1911 accordingly provides 



REPORT OF COMMISSIONER THELEN. 77^ 

that upon an approval of a bond issue by the Railway 
Commission, the corporation affected must pay a fee of $1.00 
on $1,000.00; if this statute had been in effect in 1910, the 
fees derived from it would have paid the entire expenses 
of the Commission. The imposition of such a fee is fair, 
for the reason that the approval of the governmental 
authorities to a bond issue generally results in a raise of 
a point or two in the sale price of the bonds. It will be 
well to bear this point in mind, in framing the new 
California statute. 

VI. 

Indeterminate Permits. 

Chapter 578 of the Laws of 1907 provides for indeterminate 
permits for street railways, and sections 74 and 86 of the Public 
Utilities Act of 1907 provide a similar permit for heat, light, water, Indeterminate 
and power companies in municipalities. An indeterminate permit is P erml '• 
a permit running without limit as to time and having attached thereto 
the following two conditions: 

1. If any public service corporation within a municipality has 
complied with the requirements of the statute as to the surrender of 
existing permits or franchises and has thereupon secured by operation 

of the statute an indeterminate permit, no license, permit or franchise Competition 
shall be granted to any similar concern within the same municipality regulated. 
unless the Commission finds that public convenience and necessity 
require such second public utility. 

2. The corporation, by acquiring such indeterminate permit, 

consents to the purchase of its plant by the municipality in which it Consent to 

operates, at a price to be fixed by the Railroad Commission, with municipal 

the right of appeal to the courts on the question of the price. p . , 

Chairman Roemer considers these provisions concerning inde- 
terminate permits as the very foundation stone of the regulation of 
street railroads and other public utilities in Wisconsin. The period 

within which the corporations might bring themselves within the terms n 1^25°/ i 

of the statute was extended to January 1, 1911, but only 25 per corporations avail 

cent of the public service corporations availed themselves of the themselves of 

privilege. The legislature of 1911 finally took the bull by the horns privilege. 



78 LOUIS SLOSS & CO. 

and provided that all permits, franchises and licenses theretofore 
granted by any public authority were by that act amended so as to 
be indeterminate permits, with the characteristics hereinbefore men- 
tioned. Chairman Roemer is strongly in favor of this kind of permit 
and states that the only reason why other states have not followed 
the lead of Wisconsin in this matter is that they do not understand 
Advantages of this kind of permit. He points out the following advantages accruing 
indeterminate to the corporations: 

permit. ... 

1 . They receive what is in effect a perpetual franchise. 

2. They are relieved of the necessity of providing an amortiza- 
tion fund. 

3. They are assured a fair price in case their plant is purchased 
by the municipality within which they operate. 

Such permit, on the other hand, is of great benefit to the state 
because it brings the public service corporations directly under the 
control of the Commission, avoids cut-throat competition and gives 
municipalities the power at any time to purchase the public utilities 
within their limits, at a fair price. 

Chairman Roemer was of the opinion, however, that it would not 
be wise to pass such a statute in California until the situation resulting 
from divided control of public utilities between state and local 
authorities has been clarified. 

VII. 

Use of Facilities by Other Utilities. 

Joint use of Section 794m-4 of the Public Utilities Law provides that all 
equipment public utilities having conduits, subways, poles or other equipment 
provided for. on or unc J er anv street or highway shall for a reasonable compensa- 
tion permit the use of the same by any other public utility whenever 
public convenience requires such use. Chairman Roemer considers 
this to be an important provision and upon his suggestion the legis- 
lature of 1911 added to the section provisions for physical connec- 
tions between telephone systems in such cases and under such 
conditions as might be prescribed by the Commission. Wisconsin 
and Oklahoma have shown clearly the public benefit derived from 
physical connections between telephone systems. 



REPORT OF COMMISSIONER THELEN. 



79 



increase in value 
of railroad lands. 



VIII. 

Physical Valuation. 

Railroads. — The valuation of the railroad properties of Wisconsin 
was begun in 1903 and completed several years ago. In 1909 a Remarkable 
new valuation of the land of all the railroads was made by the 
Commission and it was found that the value had gone up consid- 
erably. The railroads now render each year statements of additions 
and deductions similar to those rendered in Minnesota. The Com- 
mission usually accepts the statements of the larger railroads, which 
have men regularly employed in the work, but finds it necessary to 
check up the work of the smaller railroads. 

Utilities. — There are about one thousand utilities in Wisconsin. 
Of these the Commission has valued some fifty, being those involved 
in complaints pending before the Commission. No valuation of 
utilities had been made except in case of complaint as to rates. 
The Commission never decides a case involving the rates of a 
public utility without having first ascertained the value of its 
property. The work of valuation of utilities is divided among 
the branches of the engineering department. A hearing is always 
held by the Commission after the engineering force has completed 
its report, and the Commission then makes its findings. 

The statute contains no provision similar to that of Washington for 
a court review of findings as to value. As no valuations of utilities 
have been made except in cases pending before the Commission, 
the Washington provisions would have served no purpose in 
Wisconsin in so far as the valuations have hitherto been made. 



Utilities not 
valued by 
Commission 
except in case of 
complaint. 



IX. 

Depreciation Account. 

Section 179 7m- 15 of the Public Utilities Act provides that Depreciation 
each utility must on the order of the Commission carry an adequate accounts 
depreciation account out of operating revenues, in an amount ex P en " e ° 'under 
prescribed by the Commission, for the purpose of keeping the q • • 
property in efficient condition. The money in this fund may be 
expended for new construction, extensions or additions and for no 
other purpose. The Commission has not prescribed a general 



80 LOUIS SLOSS & CO. 

percentage but does prescribe a percentage in such rate cases as 
it decides. The Commission directs its statistical department to 
ascertain the average life of the plant and of the different compo- 
nent elements thereof and then establishes a percentage of depre- 
ciation so that if the money is put out at interest for the given 
number of years the value of the plant will have been replaced. 
The money so set aside may be used for other purposes, such as 
new construction, but when the money derived from the sale of 
new construction bonds is realized, the amount taken from the 
depreciation account is returned with interest. Commissioner 
Erickson considers this matter as one of considerable importance. 
The ordinary corporation is more interested in declaring large 
dividends than in setting aside funds for the replacement of its 
property. 

X. 

Public Convenience and Necessity Law. 

Certificate of Chapter 454 of the Laws of 1907 provides that no railroad 
/ ublic corporation shall begin the construction of any proposed line of 
. J railroad or make any extension to an existing line without having 
first secured from the Commission a certificate that public convenience 
and necessity require such construction. Before the railroad is 
operated, it must be inspected and approved by the Commission. 
This matter has been worked out in greater detail in the New York 
statute. It is one of very considerable importance, because it gives 
to the Commission the power to prevent cut-throat competition and 
wasteful duplication of plants on which the public must pay interest 
in the form of rates. 

XL 

Rate Changes. 

Changes in rates Up to 1911, the Wisconsin statute provided that no changes 

subject to should be made in the rates of a railroad or public utility except 

apprc of U p 0n n0 tj ce to the Commission. The time in case of a utility was 

ten days and in case of a railroad thirty days. Unless objection 

v/as made, the rate went into effect without further action on the 



REPORT OF COMMISSIONER THELEN. 81 

part of the Commission. In other words, the approval of the Com- 
mission was not a condition precedent to the effectiveness of the rate. 
The result was that there was very little work for the railroad rate 
department and this work was all done by one rate man and one 
assistant. The legislature of 1911, however, amended the existing 
statute so as to provide that no changes might go into effect without 
the precedent approval of the Commission. The commissioners are 
somewhat doubtful as to the wisdom of this change. They think 
that the railroads may possibly use this provision as a pretext for 
refusing to establish the rates desired by shippers. The Wisconsin 
Commission seems to have done very little work in fixing railroad 
rates. 

XII. 

Municipal Councils. 

I have already stated that utilities owned by municipalities come Municipally 

within the jurisdiction of the Commission to the same extent as other ??flf . u } c 
.,. . Utilities under 

U " 1,tleS - . .... . . control of 

Under section 1 797m-87, of the Public Utilities Law, municipal Commission. 

councils have power in the first instance to determine the quality and 
character of each kind of product or service and the terms of occu- 
pation of streets, but not the power to fix the rates. Even as to the 
rights exercised by the councils, the Commission has the right to 
review their action and to set aside their ordinances. The Commission 
recently declared null and void a city ordinance directing the 
completion by a public utility within sixty days of work which could 
not reasonably be performed in less than nine months. 

It should be noted that the only powers of regulation or control 
exercised by municipal councils are those which are particularly 
mentioned in 1 797m-87 and that as to these powers, the Commission 
has the right of review. 

XIII. 

Gas, Electric and Telephone Inspection. 

This work is carried on by a branch of the engineering department 
under the immediate charge of Mr. Cadby. For the purposes of 



82 LOUIS SLOSS & CO. 

electrical inspection, the state is divided into four districts with one 
man in charge of each district. One man supervises all the gas plants 
in the state. Another is engaged in telephone inspection. Two men 
are in the office, in addition to Mr. Cadby, making a total of nine 
men engaged in this work. 

The work is done as follows: 

Commission Gas and Electric Service. — Sections \797m-22 to 25 of the 

regulates Public Utilities Law provide that the Commission shall prescribe the 

standard of standard commercial units of product or service, standards for the 

quality and measurement of quality, pressure and voltage, and rules and regula- 

i d L7* tions, and shall examine and test appliances used for measuring the 
service of Public *T T T , . . , 

Utilities. P ro " uct anc * service or public utilities. Under these sections, the 

Commission, after numerous conferences with the interested corpora- 
tions, prescribed its order, U-2 1 — in re standards for gas and electric 
service in the State of Wisconsin, 2 W. R. C. R. 632-662. These 
rules, established on July 24, 1908, have remained unchanged. 
Acting under these sections of the statute and this order, the Commis- 
sion keeps inspectors constantly in the field making inspections of 
plants and meters and service, examining complaints and advising 
proprietors of plants how to remedy defects in service. The inpectors, 
while traveling, also fill out reports as to the service on the railroads 
over which they are traveling. These reports are turned in monthly 
with their expense accounts and are then sent to the railroads affected. 
The inspectors are all University of Wisconsin graduates and are 
paid between $90.00 and $125.00 per month. 

Telephone Service. — The department is carrying on a detailed 
Rigid telephone investigation into telephone service within the state. Men are sent 
inspection, to the different cities of the state with instructions to make one 
hundred and twelve telephone calls, of which twelve are at pay 
stations. These men note the time which expires before central 
answers, the time thereafter before the party at the other end answers, 
and the frequency of "busy" and "don't answer" replies. The results 
of these trials are then platted and sent to the telephone companies 
affected. Very marked improvements in the service are said to have 
resulted from these tests. 



REPORT OF COMMISSIONER THELEN. 83 



XIV. 

Rate Department. 

Mr. Hogan has charge of the filing of schedules of rates of 
charges in so far as railway, express and telephone companies are 
concerned. The Commission has not yet worked out a form for the 
filing of the schedules of public utilities, and few, if any, such 
schedules are on file. 

Up to the present, the chief work of Mr. Hogan and his assistant 
has been to prepare information for the Commission in rate cases. 
The Commission's usual practice is to take the testimony of both Rate expert 
sides and then to send it over to the rate expert, who reads it and reports on 
makes a report thereon. The Commission usually follows the report, e 
so that some of the railway companies have adopted the practice of 
introducing very little evidence at all, for the reason that they know 
that the Commission will investigate the subject anyway. Mr. Hogan 
has had some difficulty in securing schedules of rates of charges 
affecting Wisconsin business issued by foreign companies not doing 
business in Wisconsin and concurred in by the Wisconsin lines. The 
statute requires only the filing of tariffs issued by railroads which 
are subject to the act. The Wisconsin carriers have to ask for an 
extra copy of such tariffs for the use of the Commission. Other 
states, such as Oklahoma, secure complete files of all tariffs affecting 
the state, including those issued by foreign companies. They force 
the local companies to secure the tariffs from the foreign companies. 
Mr. Hogan files separately the tariffs affecting state business and 
those showing nothing but interstate rates. The tariffs are indexed 
according to their nature, i. e., commodity, switching, distance, 
lumber, logs, etc. A card index system is used. 

XV. 

Department of Statistics and Accounts. 

Section 1 797 m-Q of the Public Utilities Law provides that every Uniform 
public utility shall keep and render to the Commission, in the manner accounts must 
prescribed by the Commission, uniform accounts of all business ^ urnT 
transacted. Section 1 797 m-9 provides that the Commission shall 
prescribe the form of all books, accounts, papers, etc. Section 



84 LOUIS SLOSS & CO. 

1 191mA 3 provides for an annual balance sheet to show the informa- 
tion desired by the Commission. Similar provisions are contained 
in the railroad act. 

The Commission, acting under these sections, has worked out a 
set of account forms and instructions for every public utility, and in 
some cases has worked out different forms of reports for the same 
kind of utility, depending upon the size and the extent thereof. These 
forms have been worked out with great thoroughness and care. A 
complete set was sent to the California Commission upon my request, 
and should be carefully consulted as soon as the Commission under- 
takes this same work. 

The Wisconsin forms provide for an arrangement of operating 
expense accounts in order of time, so as to show the cost as to each 
step in the process. The department is also engaged in a thorough 
classification of all expenses of utilities and other facts connected 
therewith by percentages, so as to arrive at unit information. Mr. 
Detailed tables. Gruhl showed me several such tables worked out in great detail for 
some twelve gas companies. His department has also worked out 
tables of depreciation for each item of utility plants and also a 
composite curve showing depreciation for each utility. The Com- 
mission orders this percentage of operating revenues to be set aside 
for depreciation as prescribed by the Public Utilities Act. This 
department has also done very thorough work in the matter of 
investigating passenger rates of the Milwaukee street car line system. 
This case will soon be decided and will be one of the most important 
utility decisions of the Commission. 

This department also carries on a large amount of general work 
of investigation with reference to the conduct of the business ^f the 
public utilities. 

Mr. Schneider is in charge of the railroad and express statistics 
and accounting. The Wisconsin Commission has adopted the form 
of accounts prescribed by the Interstate Commerce Commission, but 
itself prints the forms which are sent out to the railway companies. 
The same is true of express companies. 



REPORT OF COMMISSIONER THELEN. 



85 



XVI. 

Express Investigation. 

Commissioner Erickson told me that the Commission has been 
investigating express rates for some eighteen months. It has secured Careful 
from the express companies general data showing amount of business investigation of 
both incoming and outgoing from each station, with the terminal 
expenditures chargeable thereto. Several hearings have already been 
held. The Commission is also going into the question of the reason- 
ableness of the rates of the railway companies in connection with 
this business. Mr. Erickson was of the opinion that Auditor 
Peabody's estimates in the Kindel case before the Interstate Com- 
merce Commission are defective, because in his original segregation 
of freight from passenger expenses he loaded the passenger expenses 
too heavily. The Wisconsin Commission has made a very thorough 
examination into this question of segregation of passenger from freight 
operating expenses. (See the Buell case, No. 32.) 



XVII. 

Writing of Opinions. 

Commissioner Erickson believes strongly in referring in detail to Discussion of 
the facts in the opinions of the Commission. He believes that the detailed reports, 
habit of doing so will induce the commissioners to make more 
thorough investigations and also that the railroads and utilities will 
be less likely to appeal. This has been the experience of Wisconsin. 
The case of City of Beloit against the Beloit Gas, Light and 
Electric Railway Company, decided while I was in Madison, covers 
over thirty printed pages. Mr. Erickson also showed me an opinion 
which he had written in the matter of the City of Janesville water 
case, containing in detail by tables figures showing operation, 
revenue, classes of consumers, etc., all prepared by the statistical 
and accounting department. Mr. Erickson realizes that some prom- 
inent commissioners prefer to write merely the decision without going 
into the reasons, but believes strongly that the Wisconsin system is 
the better one. 



86 LOUIS SLOSS & CO. 

XVIII. 

Cost Basis. 

Cost of Service Commissioner Erickson is probably the leading exponent in the 

theory as basis United States of the theory that rates should be based on the cost 

wiping. Q f t k e serv j ce> including interest on the value of the plant. He has 

prepared detailed tables showing how the cost of the service of each 

unit is secured. 

XIX. 

Relation Between State University and Commission. 

One of the most significant features of the work of the Railroad 
Close relations Commission is the close relation existing between the Commission and 
between the State University. Professor Gilmore, of the law department, 
Commission and ren d erec l assistance in the drafting of the original Railroad Commis- 
sion Act. Professor Commons, of the Department of Economics, 
drew the public utilities act of 1907. This work was done without 
compensation and on the invitation of the legislative committees. As 
I have already stated, Professors Pence, Burgess, Mack, and others 
devote part of their time to their work in the University and part to 
the work of the Railroad Commission. A large number of the 
employees of the Commission are graduates of the State University. 
Considerable work of an experimental nature has been done by the 
students of the University. A number of the students of the Uni- 
versity become interested in the work of the Commission by reason 
of the lectures that are given in the University by men such as the 
professors whom I have mentioned, and they are then upon gradua- 
tion selected as employees of the Commission. This relation is one 
which has grown up naturally and has not resulted from any 
forwardness on the part of the University. 

This relation is of very great assistance both to the University and 
to the Commission. It helps the University, because quite a number 
of her instructors are enabled to do practical work and to bring to 
their classes the point of view of a practical man. The University 
is also very materially aided because the people of the state see 
that it is helping them to solve some of their most important practical 
problems, and for that reason give her generous support. The 



REPORT OF COMMISSIONER THELEN. 87 



arrangement is also of very material assistance to the Commission. 
It gives to the Commission unprejudiced men of scholarliness and 
thoroughness and high ideals of public service. I am convinced 
that the Wisconsin Commission could not have attained its present 
high stage of efficiency if it had not been for its close association 
with the State University. 



New York 

SECOND DISTRICT. 
I. 

Introduction. 

The Public Service Commission both of the First and Second 
Districts were created by statute of 1907. They took the place of 
the Board of Railroad Commissioners, the Commission of Gas and 
Electricity, the Inspectors of Gas Meters and the Board of Rapid 
Transit Commissioners. The First District includes the counties of 
New York, Kings, Queens and Richmond; the Second Districts, all 
other counties of the state. 

The Commission of the First District has jurisdiction over railroads Jurisdiction of 
and street railroads lying exclusively within the district; street District Dl o, I , 
railroads lying partly within the district in so far as affects trans- 
portation of persons or property within the district; the portions of 
other railroads lying within the district, as to physical features; 
common carriers other than railroads, as to operations within the 
district; and gas and electric companies within the district. In 
addition to these powers, the Commission of the First District is the 
successor of the Board of Rapid Transit Commissioners in the 
matter of rapid transit within the City of New York and the 
management and control of the subways. The headquarters of this 
commission are in New York City. 

The Commission of the Second District has all jurisdiction not Jurisdiction of 
specifically conferred upon that of the First District and in addition District No. 2. 
thereto the legislature of 1910 conferred upon it jurisdiction over 



88 LOUIS SLOSS & CO. 

all the telephone and telegraph companies of the state, whether 
situated within the First or within the Second District. The head- 
quarters of this commission are at Albany. 

The Public Utilities Act contains provisions for control over the 
issue of stocks and bonds and also of extensions and new construc- 
tion (certificates of public convenience and necessity). 

The present Public Service Commission Act was very strongly 
advocated by Governor Hughes and was one of his pet measures. 

II. 

Organization and Office System. 

Commissioners The Commission. — The commissioners are Frank W. Stevens, 
appointed, the chairman, an able lawyer, who handles a large part of the 
applications for approval of stock and bond issues; Martin S. 
Decker, formerly assistant secretary of the Interstate Commerce 
Commission, who handles a portion of the applications and is 
particularly concerned with traffic matters; James E. Sague, who 
was for many years a railroad operating man and who is partic- 
ularly interested in the engineering and physical inspection work of 
the Commission; John B. Olmstead, a lawyer, who concerns himself 
with grade crossings and other matters, and Winfield A. Huppuch, 
recently appointed by Governor Dix. The Commission holds 
hearings nearly every day and is practically in continuous session. 
The chairman seems to be a particularly hard working man. The 
commissioners are appointed by the governor for the term of five 
years, at a salary of $15,000.00 per year. The New York 
salaries are considerably higher than those paid in any other state. 

Departments. Employees. — The work of the Commission is divided into the 
following divisions: 

a. Administrative. 

b. Light, heat and power. 

c. Statistics. 

d. Tariffs. 

e. Engineering and inspection. 



REPORT OF COMMISSIONER THELEN. 89 

/. Telegraphs and telephones. 
g. Traffic inspection. 

The secretary receives a salary of $6,000.00 per year. The 
present employees in the administrative department are as follows: 

John S. Kennedy, secretary; one assistant secretary; one secretary 
for each commissioner; and twenty-three clerks and seventeen stenog- 
raphers. 

The Commission has a counsel, Ledyard P. Hale, who receives 
a salary of $10,000.00 per year. 

The division of light, heat and power has a chief of division, Salaries of 
Henry C. Hazzard, who receives a salary of $4,000.00; one department 
engineer at a salary of $5,000.00; six persons employed in the " ea " s « 
electrical department; and thirteen in the gas department. The 
division of statistics consists of a chief statistician, who receives a 
salar)' of $5,000.00 per year, and fifteen employees. The division 
of tariffs consists of a chief of division, at a salary of $4,000.00, 
and seven employees. The division of engineering and inspection 
consists of a chief of division, at a salary of $4,000.00 per year, an 
inspector and assistant inspectors of electric railways, an engineer 
and inspectors of grade crossings, a supervisor of equipment and two 
assistant supervisors, a boiler inspector, a mechanical "engineer, four 
steam railway inspectors and several clerks and stenographers. The 
division of telegraphs and telephones has a chief, at a salary of 
$4,000.00, and an engineer and seven employees in the Albany 
office and an engineer and three employees in the New York City 
office. The division of traffic inspection consists of one inspector, 
whose station is at Buffalo. Altogether, the commissioners and the 
employees of the commission number one hundred and thirty. The 
budget for the year 1911-12, is $388,000, with an additional 
$350,000 as the state's share of the cost of elimination of grade 
crossings. 

Office System. — All communications both to and from the 
Commission are handled by the secretary. Each morning he goes 
through the mail and assigns the correspondence to the respective 
divisions. The files in the general office are arranged in three main Methods of 
groups (1) formal matters; (2) informal matters; (3) general Ming. 



90 LOUIS SLOSS & CO. 

correspondence. Both formal and informal matters are numbered. 
The filing clerk keeps in her desk a book for informal matters and 
assigns to each matter, as it comes in, a number. A decimal filing 
system has been carefully worked out for the general correspondence 
files. The office has one large general index. Formal matters are 
indexed by name of complainant (on a white card), name of the 
respondent (salmon), name of the locality (blue), and the names 
of all persons who are connected in any way with the case, including 
everybody who writes in about it and all lawyers who appear, except 
the regularly retained corporation lawyers. In this way an index 
is given to every possible clue. Informal matters are indexed in the 
same way on the same colored cards. However, these matters have 
two letters "cc" i. e., "correspondence complaints," in the upper 
right hand corner. All applications also appear in this same index 
on green cards. General correspondence matters are indexed by 
names of the persons. Separate indexes are also kept for the subject 
matter of all complaints both formal and informal. I consider the 
filing system of this office to be the best which I observed in any of 
the commissions, and secured for the information of the California 
Commission, a copy of the decimal system key. 

III. 

Division of Heat, Light and Power. 

Gas and This division has charge of the inspection of all gas and electric 
electric plants within the district and the testing of gas meters. Its chief is 
inspection. Henry C. Hazzard. The Commission has prescribed standards of 
purity and of illuminating power of gas, and has four men in the 
field constantly inspecting gas plants to see whether these standards 
are being complied with. Examinations are also made of the 
safety of construction and operation of high tension power lines. 
About 80 per cent of the gas furnished is used for heating. Conse- 
quently, in Mr. Hazzard's judgment, a calorific test is better than 
a lighting (candle power) test. Several conferences have been 
held between the Commission and the gas companies for the purpose 
of having the companies adopt a calorific test. The matter is now 
in process of adjustment. Every gas meter is inspected before being 
installed; this work necessitates the employment by the Commission 



REPORT OF COMMISSIONER THELEN. 91^ 

of seven gas meter inspectors. Electric meters cannot be so inspected 
before installation, for the reason that because of their delicacy they 
vary materially between the time of inspection and the time of 
installation. After the installation of the gas meters, they are not 
inspected by the Commission except upon complaint of a user of gas. 
The corporation, however, is directed to keep meter testing apparatus, 
which is inspected from time to time by the Commission's inspectors. 
In Wisconsin, the Commission does not in the first instance test every 
gas meter, but forces the company to do so within thirty days after 
installation, and once every two years thereafter. The New York 
Commission also forces the electric companies to purchase machines 
for testing electric meters and to make tests at regular intervals. 

IV. 

Division of Statistics. 

This division is in charge of Mr. Wishart, who was formerly Forms of 
with the Interstate Commerce Commission. The chief work of the accounts. 
department is to prescribe forms of accounts and reports, to analyze 
the reports, and to furnish statistical data when required by the 
Commission in cases of stock and bond issues and other cases. With 
reference to steam railroads, the department uses the Interstate Com- 
merce Commission's forms as models, but prints its own blank forms, 
with paper covers for convenience in filing. As to express companies, 
forms prepared by the Interstate Commerce Commission are used. 
As to gas and electric companies and street railroads, the depart- 
ment has prepared its own forms for three classes of companies in 
each case, being those which are large, medium and small. The 
department is now preparing forms for telephone and telegraph 
companies. Copies of all these forms have been sent to the Cali- 
fornia Commission at my request. 

The department has two traveling auditors to examine the books Traveling 
of public utility corporations, to make reports on special cases, and auditors. 
to assist the smaller companies in keeping their books. 



92 LOUIS SLOSS & CO. 



V. 

Division of Tariffs. 

Department This division is in charge of Mr. Griggs, who has devised the 
prescribes form mos t thorough tariff filing index system which I observed on my 
** * tour. The Commission has issued its Circular No. 55, being 
regulations prescribing the form and governing the construction and 
filing of freight tariffs and classifications and passenger fare 
schedules of railroad companies. It has also prepared a form of 
schedule for heat, light and power companies, but this form has not 
as yet been adopted. Mr. Griggs is now working on a form of 
schedule for telephone and telegraph companies. None of the 
public utilities have as yet filed any tariffs. This division issues a 
weekly tariff bulletin showing all changes in transportation rates and 
fares for the preceding week. * 

The largest part of the work of this division consists in keeping 
up the very thorough card index system which Mr. Griggs has 
devised. He has one index to tariffs by railroads, showing passenger, 
class freight and other tariffs, except commodity tariffs, and a separate 
index for all the commodity tariffs. The commodity index runs 
alphabetically from a to z, each commodity being separately indexed. 
Whenever a tariff schedule comes into the office and is ready for 
filing, every commodity shown therein is passed on to the index cards. 
For instance, under the head of "apples" will be found a reference 
to every schedule which shows a rate on apples. In this way, it is 
possible to tell at a moment's notice every rate on apples in effect on 
any railroad within the State of New York for the last four years. 
In some cases, one single schedule necessitates several thousand 
notations on the index cards. 

VI. 

Division of Traffic. 

Relief of This division consists of one inspector with headquarters in 
traffic Buffalo, where the steam railroad traffic is more congested than in 
congestion. any otner c j ty m tne state# J t { s the duty of this inspector to study 
how to relieve this congestion and to expedite traffic. 



REPORT OF COMMISSIONER THELEN. 93 



VII. 

Division of Engineering and Inspection. 

The steam railroad inspectors go over all of the steam railroads Inspection of 
of the state each year and inspect the same as to their physical station facilities. 
features, such as the adequacy of stations and yard facilities and 
the condition of the track. One supervisor and two assistants do 
similar work with reference to railroad equipment. The inspector 
of electric railroads has charge of the physical features of the electric 
railroads of the second district and examines into all complaints 
affecting them. The division also has in its employment a locomotive 
boiler inspector and an engineer and an inspector of grade crossings. 

The railroads furnish to the Commission, at short intervals, reports 
as to each passenger train delay. The engineering and inspection 
division thereupon analyzes the returns and suggests improvements. 

VIII. 

Division of Telegraphs and Telephones. 

The statute of 1910 provides that the Commission of the Second 
District shall have jurisdiction over all telegraph companies and over 
all telephone companies having a property value of $10,000.00 or 
over. Out of eleven hundred telephone companies in the state, only Eleven hundred 
one hundred and thirty-five report that they have the required amount telephone 
of property. The Commission is having considerable trouble with 
telephone companies by reason of discriminations in charges arising 
from existing contracts. The Commission has called for a statement 
from the telephone companies as to every discrimination of this 
kind, and may take action to order the cancellation of such contracts. 
No investigation has been made into the value of the plants of these 
companies and no rates have been fixed for any of them. 

IX. 

Stocks and Bonds. 

xt • r * . . , , . Stock and bond 

No issue of stocks, bonds or other securities payable in Issues su hj ec t to 

more than twelve months, of any of the companies subject approval of 

to the Public Utilities Act is valid without a certificate of Commission. 



94 



LOUIS SLOSS & CO. 



Information 

required by 

Commission. 



Commission 

prescribes 

purpose for 

which proceeds 

may be used. 



Discussion of 
policy. 



authority from the Commission. A very large part of the 
Commission's work consists in hearings on these applica- 
tions. Under the rules of procedure prescribed by the 
Commission, a petition is filed setting forth the amount and 
details of the proposed issue; the purposes for which the 
proceeds are to be used; a general description of property, 
facilities or service to be acquired or obligations to be 
refunded; the financial condition of the applicant; the cost 
of construction of the proposed improvements; and the 
contract for the sale of the stocks or bonds, or an affidavit 
as to the amount probably to be realized. The Commission, 
generally acting through Chairman Stevens or Commis- 
sioner Decker, makes a thorough examination into the 
application. If there is any question about the matter, the 
accountants and sometimes the engineer of the Commission 
are sent out to examine the plant and to report. The Texas 
law as to 'stock and bond issues of railroads provides that 
no registration of bonds shall be authorized without a 
precedent valuation of the plant. The New York Commis- 
sion generally does not seem to require a valuation as a 
condition precedent to the issuance of the certificate. 

The order of the Commission generally prescribes the 
purpose for which the money is to be used, directs the 
applicant to report under oath the sales of obligations 
issued and the terms and conditions and amounts realized 
and to make a verified report at least once every six months 
showing in detail the use and application by the applicant 
of the moneys so realized. No form for applications nor 
for reports has been prepared. 

The Commission lays very particular stress on this part 
of its work. One very important question which has arisen 
is as to whether or not the Commission has the power, 
under the statute, to impose conditions on the grant of its 
permission. Recently the Commission made an order per- 
mitting an electric railway company, which was very much 
overcapitalized, to issue $500,000.00 worth of bonds to 
make improvements, on condition that the company strike 
off $100,000.00 of its capital stock. The Commission's 



REPORT OF COMMISSIONER THELEN. 95 

order in this matter is now in the courts. It is important 
to have the statute provide that the Commission shall have 
the power to impose conditions, otherwise it is powerless to 
force the writing off of any watered stock or to force com- 
pliance with any other requirement which, in the judgment 
of the Commission, may be necessary to protect the com- 
pany and the public. 

X. 

Certificate of Public Convenience and Necessity. 

The railroad law and the public service commission law both Certificate of 
provide that the corporations therein specified shall not begin the ^"^/ic 
construction of a new plant or an extension of an existing one or 
exercise any new franchise or right without having first secured from 
the Commission a certificate that public convenience and necessity 
require the construction or the extension or the exercise of the 
franchise or right. 

The applicant must file a petition showing all the material facts Facts required, 
connected with the enterprise, including the manner in which it is 
proposed to finance the construction or extension. The Commission 
then gives notice to each municipality affected and to every other 
public service corporation of the same kind likely to be concerned 
and to eveiy person who has corresponded in the matter, and directs 
the applicant to publish notice in a paper designated by the Com- 
mission. The chief question, at the hearing, is generally as to 
whether or not the public convenience or necessity requires the 
construction of a new plant or the extension of an existing one. The Competition 
hearings are often contested between the existing company and the regulated. 
new one which is seeking to enter the field. Where the application 
is submitted by a proposed competitor of an existing utility and 
the utility already in the field is giving satisfactory service, the 
Commission generally denies the application. If the existing com- 
pany is giving poor service, the Commission often holds the application 
of the new company as a club over the head of the existing company 
in order to force better service. The commissioners told me that 
they considered this provision an extremely important one. Cut- 
throat competition between such companies usually results in deterio- 



96 LOUIS SLOSS & CO. 

ration of the equipment and the service, and when the inevitable 
consolidation takes places, the public must pay interest on both 
investments. 
A particular The Commission recently refused permission to a proposed new 
case. ra il r oad, the Buffalo, Rochester and Eastern to build from Buffalo 
easterly towards Boston, a proposition involving a contemplated 
outlay of more than one hundred million dollars. The reason for 
the refusal was that the traffic in the territory affected was already 
being adequately handled by the existing railroads and that there 
was no reason for the investment of so much additional capital on 
which the public would have to pay interest. A rehearing was 
granted in the case, but a decision affirming the former decision 
was being prepared when I was with the Commission, although a 
large number of legislators had signed a petition to the Commission 
"to decide the case promptly and in favor of the applicant" and 
though there was considerable public agitation in favor of the 
project. 

XL 

Physical Valuation. 

Little progress This Commission has done practically no work in ascertaining 

in physical t ne value of the properties of the corporations subject to its jurisdic- 

on ' tion. The only work which has been done has consisted in the 

valuation of a few of the smaller utilities in complaints before the 

Commission concerning their rates. In the New York telephone 

case, recently decided, concerning ten cent tolls between New York 

Reduction of City and adjoining cities, the Commission reduced the toll to five 

telephone tolls. ce nts. The Commission struck out an item of thirty million dollars 

for special franchise values, and then took the telephone company's 

own figures as to value. One valuation was made during the last 

four years in the matter of a gas rate. One of the commissioners 

told me that there was little occasion for investigating railroad rates 

for the reason that they were stable and that the railroads were 

J,, . entitled, if anything, to a higher rate than those in effect. 

fihvsical Chairman Stevens, speaking for himself, is not impressed by the 
valuation physical valuation theory of some of the western states. He thinks 
discussed, such valuations unsatisfactory for three reasons: 



REPORT OF COMMISSIONER THELEN. 97 

1. Because the principles upon which they are based have not 
as yet been clearly defined by the courts. 

2. Because the ascertainment of the valuation is largely guess 
work. 

3. Because he does not know what to do with the valuation after 
he gets it. 

As bearing on the second point, he referred to a Buffalo gas or 
electric case, in which he had been taking testimony for some two 
weeks and in which the experts varied two hundred per cent in Experts differ. 
their valuations. He is of the opinion that this entire question of 
physical valuation is largely guess work, particularly with reference 
to depreciation. In his judgment, the original cost of the plant 
(not the cost of reproduction) is a material element, but he points 
out that in New York State it is absolutely impossible to ascertain 
the original cost of construction of the railroad properties. He stated 
also that the application of the cost of reproduction theory would 
very materially raise the railroad rates in the State of New York. 

XII. 

Rate Fixing. 

As I have already indicated, the New York Commission has done Perfect service 
practically no work in the way of rate fixing. In 1907 the legislature ls ' r< ? , 
passed a two cent maximum fare passenger law, but Governor 
Hughes vetoed the bill on the ground that there had been no 
investigation sufficient to justify the reduction. The Public Service 
Commission did not at that time have the power to investigate rates 
on its own initiative. No investigation has ever been made. Mr. 
Stevens' view of the matter is that the service should first be perfected, 
and that when this has been done, the Commission can take up the 
question as to whether or not the company is still receiving excessive 
compensation. The Commission has never made any investigation of 
express rates. 



98 LOUIS SLOSS & CO. 



XIII. 

Relation With Newspapers. 

The Commission is very particular to see to it that adequate 
Full publicity publicity is given to its proceedings. Each day the assistant secretary 
to work of prepares a statement of the matters which have come before the 
Commission. Commission during the day, including decisions and new applications 
for the approval of stock or bond issues and for permission to 
construct new plants or extensions of existing plants. These state- 
ments are secured each day by the newspaper representatives and 
are published in a large number of the papers in the state. While 
I was traveling in other states, both in the east and south, I read, 
from time to time, in the local papers, items which had been 
telegraphed over the wires of the Associated Press from the Com- 
mission of the Second District of New York, showing the effectiveness 
of the newspaper work of the Commission. 

XIV. 

Relation Between Commission and Corporations. 

Commission and This Commission, like that of Wisconsin, seems to be on friendly 
corporations terms with the corporations subject to its jurisdiction. I was told 
friendly, ^j. t nere are at present only three or four cases in the courts 
arising out of orders of the Commission, these being cases raising 
questions concerning the jurisdiction of the Commission in certain 
matters, such as the power to impose conditions upon the issue of 
stocks and bonds. 

This condition of affairs, existing as it does with reference to the 
work of two of the most thorough and capable of the Commissions 
of the country, would seem to justify the conclusion that where the 
work of Commissions is done with considerable care and thoroughness, 
the probability of appeal from their orders is slight. The result 
has been that the entire legal work of the Commission is handled 
by its counsel, personally, without any assistants. It is interesting 
in this connection to note that the legal department of the Commis- 
sion of the First District in New York consists of a Counsel and 
some four or five assistants, who are kept constantly busy with the 
Commission's litigation. It is only fair, however, to say that a 



REPORT OF COMMISSION ER THEL EN. 99 

large portion of the litigation of the Commission of the First District 
is probably due to a mean spirit on the part of some of the corpora- 
tions, and to the fact that former watering of stock and excessive 
issues of bonds have placed the corporations now in such a position 
that they cannot meet the interest on their bonds and declare 
dividends, and consequently are not in a mood to comply with any 
order requiring an additional outlay of money. 

XV. 

Elimination of Grade Crossings. 

Hie Railroad Commission Law of 1907 contains elaborate Attempts to 
provisions concerning the power of the Commission with reference abolish grade 
to supervision of crossings, and particularly the abolition of grade *~ ro 
crossings. In the years 1907 to 1910 the State of New York paid 
as its share in the elimination of grade crossings, the sum of 
$1,270,831.49. The final determination by the Commission of a 
large number of grade crossing cases has been held up because of 
the failure of the legislature of 1909 to make any appropriation for 
the further elimination of such crossings. The legislature of 1911, 
however, appropriated $350,000 for this work. In the three 
years from 1907 to 1910, inclusive, 226 persons were killed and 
400 injured at highway crossings in New York State outside the 
limits of New York City. The Commission has recommended that 
a statute be passed requiring the railway companies to remove, at 
their own expense, each year one grade crossing for every three 
hundred miles of railroad. The problem is becoming more serious 
every day. 

XVI. 

Discounts and Expenses. 

The Commission has taken the position that discounts and Discussion of 
expenses incurred in connection with the original sale of securities methods of 
are not to be regarded as capital on which interest must be paid write-off 
indefinitely, but rather that they are amounts which must be °f d lscounts - 
apportioned annually over the period of life of the security. In 
other words, these sums should be paid out of income and not 



00 LOUIS SLOSS & CO. 



regarded as capital account. This matter is of importance, in view 
of the fact that the Washington Commission, in making its valua- 
tions, permitted the railroads to capitalize these items. 

XVII. 

Amortization Fund. 

Amount of The Commission insists that the companies shall set aside each 
a ™° r l l2 [ a J l0n year out of their income an amortization fund. While it would 
corporations natura ^y De expected that the corporations would be glad to do so, 
the fact is that many of their managers, desiring to declare as large 
a dividend as possible, have been extremely dilatory about setting 
aside this fund. The Commission has prescribed no percentage of 
depreciation to be set aside, but has left the responsibility for the 
present with the corporations themselves. 



Massachusetts 

A. 
RAILROAD COMMISSION. 

I. 

Introduction. 

The Board of Railroad Commissioners of Massachusetts was 
apparently created by act of 1864, although its active work seems 
Jurisdiction, to date from the act of 1 869. The Board has limited jurisdiction 
over all steam, electric, and street railroads, express companies 
and "steamship companies serving as common carriers throughout 
the year between two or more ports'* of the commonwealth. 
Jurisdiction over gas and electric light companies is exercised by 
the Gas and Electric Light Commissioners. Jurisdiction over 
telephone and telegraph companies is exercised by the Board of 
Highway Commissioners. 

The General Court (legislature) of Massachusetts meets 



REPORT OF COMMISSIONER THELEN. 101 



annually and each year passes quite a number of amendments to 
the railroad commission act, and resolves (resolutions) calling upon 
the Board to investigate special problems and to report thereon. 

II. 
Organization and Office System. 

The Commission. — The commissioners are Walter P. Hall, Commissioners 
Chairman; Geo. W. Bishop and Clinton White. Mr. Hall is a appointed. 
lawyer. All the chairmen from Chas. Francis Adams down have 
been lawyers. Mr. Bishop was formerly road master of the 
Fitchburg railroad and is the practical railroad man of the 
Commission. Mr. White has served for ten years, is a banker and 
financier and handles the stock and bond applications. The 
commissioners give practically all their time to the duties of their 
office. They spend considerable time in traveling both in the 
United States and abroad for the purpose of familiarizing them- 
selves with traffic conditions and with the most approved methods 
of railroad operation. 

The railroad commissioners are appointed by the governor and 
serve for three years. By amendment of 1906, the salary of the 
chairman was raised to $6,000.00 and that of the other two 
commissioners to $5,000.00. 

Employees. — The employees of the Board consist of a secretary, 
an assistant secretary, an auditor, an assistant auditor, a consulting 
engineer, ten inspectors and four stenographers. The secretary, Duties of 
Chas. E. Mann, is appointed by the governor, at a salary of employees. 
$3,000.00 per year, and has served since 1893. The only other 
secretary whom the Commission has had served from 1 869 to 
1893. The function of the accountant and his assistant is to edit, 
check over, analyze and digest the reports submitted each year by 
the railroad companies. The consulting bridge engineer, Professor 
George F. Swain of the Harvard Scientific School, receives a 
salary of $3,000.00. The inspectors are paid $2,000.00. 

The total expense for salaries for the year 1910 was Salaries. 
$42,600.00. The sums of money appropriated annually by the 
Generd Court for salaries and expenses of the board, its clerks 



102 



LOUIS SLOSS & CO. 



and employees, are apportioned by the tax commissioner among 
the corporations subject to the jurisdiction of board, in proportion 
to gross earnings, and are collected in the same manner as taxes 
upon such corporations, so that the entire expense of maintaining 
the board is ultimately paid by the corporations which are subject 
to its jurisdiction. 

Office System. — The office system is not elaborate, for the reason 
that the Board does not handle a very large amount of business. 
Records of ^jj f orma J matters are numbered and a brief history thereof 
written in an index book. I glanced through this book and noted 
that practically all matters noted therein are petitions by the 
railway companies for approval of locations, approval of stock 
and bond issues, approval of right to exercise franchises, etc. On 
a number of these pages I noticed only a single case of a complaint 
by the third party asking a hearing. Matters which are referred 
to the Board by the General Court for investigation are also noted 
as formal matters. An index is kept of all correspondence matters. 
A book containing an entry of every letter received and sent out 
in each such matter is also kept. The secretary keeps a card index 
of all applications by railroads. He keeps letterpress books for 
his correspondence and also one for "Orders of Notice,*' these 
being notices to corporations that matters have been set for certain 
dates. The blank forms of these orders are printed in copying 
ink so that the entire notice appears in the letterpress book. 

The minutes are kept in a loose leaf book with typewritten inserts. 
On the theory that the Board is in session all the time, no mention is 
made of adjournments to any particular time. The minute books 
show proceedings on an average of about every other day. 



III. 

Rate Fixing. 

Up to 1911, the Board had, with reference to rates, recom- 
Commisswner s me ndatory powers only. For that reason, the Board was referred 



au 



thority 
limited to 



to by a committee of the National Association of Railroad 
recommending Commissioners as a weak board. It is evident that this charge 
changes of rates, rankles. The commissioners explained that although they did not 
have the power to fix a rate, they accomplished practically the 



REPORT OF COMMISSIONER THELEN. 103 

same purpose through their powers of recommendation, for the 
reason that if their recommendations were not complied with, the 
General Court would pass a statute in the matter, lowering the 
rate. I have been informed within the last few days, however, 
that the General Court before adjourning this spring finally gave 
to the Commission the power to fix rates. 

In response to a resolve of the General Court, the Board has 
made a thorough investigation into the commutation rates within 
fifteen miles of Boston and has secured the adoption by the rail- 
roads of twelve day tickets and has also induced them to smooth 
out all inequalities in rates in concentric spheres of territory radiating 
out from Boston. Under a resolve of 1911, the Board must now 
investigate commutation rates further out than fifteen miles. Com- 
missioner White told me that there is a considerable agitation for 
the reduction of commutation fares further out, particularly on 
electric roads, and that the promise of a reduction in such fares 
is frequently the principal plank in the platform of a candidate for 
the General Court. 

IV. 

Facilities, Equipment, Safety Devices. 

With reference to repairs, additions to rolling stock, additions to Commission may 
or alterations in stations or waiting rooms, and manner of operation, recommend 
the powers of the Board are recommendatory only. Certain improvement of 
statutes, however, have given to the Board the power to compel 
the installation of interlocking plants, signal plants at crossings and 
safety devices. In general, the Board has mandatory power as to 
matters affecting the safety of passengers and merely recommendatory 
power in the general field of service, safety and equipment. 



Powers of Board as to Charters, Finances and Certificate 

Construction. required from 

The most important powers of the Board are those which are L , -i j 

. . , . r ... . before a railroad 

exercised in the granting of certificates as preliminary to the incor- company may he 

poration of railroad companies and their construction and financial incorporated. 

operations. 



104 LOUIS SLOSS & CO. 

Incorporation. — After the incorporators of a proposed railroad 
company have signed articles of intended association and have 

Certificate of advertised the same, they must secure from the Board a certificate 
public that public convenience and necessity require the construction of a 

convenience. ra jl roac l as proposed in the articles of agreement. The Board 
has power to refuse the issue of such a certificate. The Board in 
its order sets a date for the hearing of the matter and usually 
directs publication in at least one newspaper in each city or town 
affected, and also directs a copy of the publication to be served 

Discussion of on the mayor of each such city or town. Railroads which might 
policy be affected are also notified. The general policy of the Board is 
to grant such certificates wherever they affect new territory but to 
refuse them where the territory is already adequately served. In 
case the existing service is inadequate, and the existing company 
is slow to improve it, Commissioners Hall and White differ as to 
the policy to be pursued. Chairman Hall would grant the 
application on the ground that competition is a good thing. Com- 
missioner White would hold the matter in abeyance, using it as a 
club over the head of the existing corporation to compel improved 
service, and ultimately granting it only if the existing corporation 
does not come up to scratch. Chairman Hall fears that this policy 
will ultimately result in the refusal of any new corporation to 
apply, and consequently a tendency on the part of the existing 
corporation not to keep up its service. 

The Board last year refused several applications for new 
railroads, among them the application of the Boston, Lowell and 
Lawrence Electric Railroad Company, in which case Chairman 
Hall dissented. The Board last year granted certificates to four 
railroads, refused them to two (Hall dissenting) and postponed 
one matter (Hall dissenting). 

Procedure. If the Board issues the certificate of public convenience and 
necessity, the proposed corporation must then agree as to its route 
with the board of aldermen of all the cities and towns through 
which the railroad is to run, must pay into its treasury ten per cent 
of the par value of the stock subscribed, and must then secure from 
the Board a certificate of compliance with the provisions prelim- 
inary to incorporation. Then, and only then, can the incorporators 



REPORT OF COMMISS IONER THELEN. 105 

secure from the secretary of the commonwealth their certificate of 
incorporation. 

As far as I was able to ascertain, Massachusetts is the only 
state which makes the issuance of a certificate of public convenience 
a condition precedent to the issuance of articles of incorporation. 
In Wisconsin and New York, the proposed company can incor- 
porate and secure its articles, subject to the possibility that the 
Railroad Commission may thereafter refuse permission to build the 
railroad for which they are incorporated. The Massachusetts plan 
is more logical in that it goes to the root of the matter and prevents 
the initial incorporation of such company, unless the Board of 
Railroad Commissioners decides that public convenience and necessity 
require the construction of a railroad along the route specified in the 
articles of incorporation. 

Construction. — After the certificate of incorporation has issued 

and the railroad has been constructed, it can not be operated until Certificate of 

the Board has issued its certificate that all laws regarding its Commission 

construction have been complied with and that it appears to be Te Q utre ^ after 

in a safe condition for operation. If the railroad thereafter wishes L - L 

.... , before beginning 

to extend its line or to add a new piece or track, it must secure operation 

from the Board an approval as to location. With reference to 

locations, the Board has power to refuse the certificate only on 

the ground of menace to public safety. The right of the railroad 

to build along a certain route has already been settled by the 

issuance of the certificate of public convenience and necessity. The 

question arising under an application for the approval of a location 

is simply the determination of a specific location in that general 

route. 

If the railroad thereafter wishes to lease the franchise of another Leases, mergers 

railroad corporation, or to consolidate with such corporation, or to under control of 

enter into a contract with it under which the corporation shall Commission. 

perform all the transportation upon the road of the other, it must 

first secure a certificate of authorization from the Board of Railroad 

Commissioners. 

Finances.-If a railroad wishes to issue stocks, bonds, ^£ must be 
notes or other evidences of indebtedness, payable more approved by 
than twelve months from the date of issue, it must first Commission. 



106 



LOUIS SLOSS & CO. 



secure a certificate from the Board of Railroad Commis- 
sioners. No form of petition has been prescribed by the 
Board. The Board generally directs notice to be published 
in one or more newspapers. Cases of contest in matters 
of this kind are extremely rare. There is generally an 
appearance made by the attorney and the treasurer or 
auditor of the applicant. The Board does not seem to 
make the careful examination into the value of the appli- 
cant's property which is made in New York and Texas, 
but seems to rely largely upon the knowledge of finance 
possessed by Commissioner White. 

The statute does not specify the purpose for which such 
issues can be made and in this respect differs from the 
statutes of New York and Wisconsin. Commissioner 
White told me that the present Board has never authorized 
an issue for any purpose other than the purchase of prop- 
erty except under one statute which authorized the issue 
for working capital. Mr. White thinks it wiser to have 
the statute give the Board general powers in this respect 
instead of tying the hands of the commissioners by detailed 
statutory provisions. 

I had some little conversation with Commissioners Hall 
and White with reference to the policy of the commissions 
in New York in forcing an applicant at times to write off 
a designated amount of capital stock as a condition prece- 
dent to the approval of a new issue of stocks or bonds so 
as gradually to squeeze out the water. Chairman Hall is 
strongly of the opinion that the Commission should not 
go into these matters, but should start with a clean slate 
and should consider only whether the amount of the issue 
applied for is too large for the purpose specified and 
whether the purpose specified is legitimate. He referred 
to the converse case in which the corporate plant is worth 
more than its stocks and bonds and asked why it would 
not be permissible in such a case, if the theory referred to 
is correct, to permit a new issue of stocks or bonds without 
putting in any new money into the plant. He does not see 
how the New York Commissions can consistently refuse 



Commissioners 

prefer general 

powers rather 

than detailed 

statutory 

provisions. 



Discussion. 



REPORT OF COMMISSIONER THELEN. 107 

to grant such permission in the latter case. I found no 
crystalization of opinion among the commissions on this 
point. 

These provisions with reference to incorporation, con- 
struction, and finances give to the Board immense powers, 
and the larger portion of its work is performed under them. 
The stock and bond law has been in effect since 1875, and 
the public convenience and necessity law since 1882. Wis- 
consin, New York and other states which have recently 
adopted similar provisions, all apparently took them from 
Massachusetts. 

VI. 

Grade Crossings. 

The matter of alteration or abolition of grade crossings is an 
extremely important one in Massachusetts. In 1910, the Com- 
mission approved plans for the abolition of crossings at grade in Abolishment of 
eight towns and also approved two agreements for alterations in £ ra " e crossings, 
grade crossings. In cases of abolition, the railway companies pay 
65 per cent of the expense, and the state and the city or town Cost divided. 
35 per cent. $34,000,000 has already been expended in 
Massachusetts by the railroad and public authorities in the abolition 
of grade crossings. In 1910, the commonwealth voted an additional 
$500,000 for this purpose. Both Chairman Hall and Commis- 
sioner White urged strongly that California take steps in this matter 
at once, before the expense becomes enormous, as is the case in all 
the eastern states. 

VII. 

Court Procedure. 

The Board has had almost no cases in court. This is partly due 
to the fact that a large portion of the work of the Board has been Little litigation. 
recommendatory and that none of it has involved the fixing of a rate. 
The remedy adopted, whenever any was used, has been certiorari. 
The Board has been reversed only four times in its history. Two 
of these cases date back to the days of Charles Francis Adams. 



108 LOUIS SLOSS & CO. 

VIII. 

Preparing Annual Report. 

Secretary Mann showed me his method of preparing his annual 

Method of report. During the year, the usual main heads in a report are 

keeping data for cu t out and all orders and other matters pertaining thereto are 

s ' pasted under these heads in chronological order, ready for printing. 

The index heads are also cut out and pasted on cards, and new 

cards are prepared by one of the clerks at odd times as new 

headings become necessary. All orders in so far as possible, are 

held off after December 15 th, and the Chairman's report must 

be in by that day. Proof has been read in the meantime, from 

time to time, by the secretary, with the result that the signed report 

is on the desk of the legislators by the first Wednesday in January. 

The statistical reports are printed in a separate volume. By 

planning the work ahead during the year, it is comparatively easy 

to have the report prepared in time. 

IX. 

Library. 

Interesting Secretary Mann has spent considerable time in securing a library, 
Ubrar}) of particularly in so far as the railroads of Massachusetts are con- 
Lommission. cernec J # He has collected a large number of pamphlets dealing 
with the early history of these railroads, and practically all the 
books that have been published affecting in any way the railroads 
of the commonwealth. He showed me some extremely interesting 
pamphlets going back to the very first railroad construction in 
Massachusetts, and others dealing with the early history and 
construction of the Hoosac Tunnel. He has also secured from 
the railroads and from booksellers and private libraries almost 
complete sets of the stockholders' reports of the railroad companies — 
a matter of considerable importance to an effective railroad com- 
mission. He has also prepared a historical card index of all the 
railroads of Massachusetts, showing in detail every step in their 
history, beginning with the incorporation and continuing through 
every organization, reorganization and consolidation, and every statute 
and order of the Board referring in any way to these matters and 



REPORT OF COMMISSIONER THELEN. [09 

to the issuing of stocks and bonds. I shall go into this latter 
matter a little more fully in connection with the work of the 
Public Service Commission of the First District of New York. 
These two commissions seem to be the only ones which have 
realized fully the immense value of having in the office of the 
state board detailed and accurate information concerning the entire 
history of the railroad companies of the state. 

X. 

Inspectors. 

Up to 1911, the legislature provided for seven inspectors. The 
state was divided into six districts, with one inspector in charge 
of each district. The duty of each inspector is to look into the 
service, equipment, and facilities of the steam and street railroads Duties of 
within his district and to investigate complaints affecting these matters. lns P eclors - 
The seventh inspector is a locomotive inspector and spends his time 
riding on locomotives. Commissioner White is particularly proud 
of these inspectors. All of them are practical railroad men. Each 
Monday they report to Commissioner Bishop at a general confer- 
ence. There is sufficient diversity in their qualifications so that one 
or the other is qualified to handle practically any matter which 
may come up, however technical it may be, involving a question 
of service, facilities, or equipment. The legislature of 1911 
increased the number of the inspectors from seven to ten. 

B. 

GAS AND ELECTRIC COMMISSIONERS. 
I. 

Introduction. 

Since 1885, jurisdiction over all the gas and electric light 
companies of the state has been exercised by the Board of Gas 
and Electric Light Commissioners. 

Hie Board has the following general powers: General powers. 

1 . To supervise all companies manufacturing and selling gas 
or electricity for light or heat. 



no LOUIS SLOSS & CO. 

2. To authorize a gas light company to engage in the business 
of furnishing electricity for heat and power. 

3. To sit as court of appeal on decisions of boards of alder- 
men or selectmen on the petition of a second company to lay gas 
pipes in the streets. 

4. To exercise similar power as to electric light companies. 

5. To prescribe forms of accounts. 

6. To compel the rendition of annual returns. 

7. To compel a company to supply gas or electricity upon 
the petition of a consumer. 

8. To fix the quality and price of gas or electricity upon 
petition of the mayor of a town or the board of selectmen or 
twenty consumers. 

9. To fix the price of gas or electricity upon petition of the 
company. 

10. To test electric meters on petition of a consumer. 

1 1 . To investigate accidents. 

12. To test and seal all gas meters before installation. 

13. To test all gas for candle power and for sulphur, 
ammonia, and other impurities. 

14. To enforce provisions of a recent statute as to smoke in 
Boston, Brookline, Cambridge, and other cities. 

15. To regulate all issues of stocks and bonds and all consol- 
idations of gas and electrical companies. 

II. 

Organization and Office System. 

The Commission consists of Forrest E. Barker, Chairman, Morris 

Schaff, and Alonzo R. Weed. Chairman Barker is a lawyer 

and has served on the Board since the seventies. Mr. Weed is 

Commissioners an engineer, a graduate of West Point and has just been reap- 

appointed. pointed for the ninth or tenth time. The Commissioners are 



REPORT OF COMMISSIONER THELEN. TH 

appointed by the Governor at a salary of $5,000.00 for the 
Chairman and $4,500.00 for the other two Commissioners. The 
Commissioners devote their entire time to the duties of the office 
and seem to perform a very large amount of work. Their report 
is among the most thorough and comprehensive of any of the 
reports published by state commissions. 

Employees. — The employees consist of a clerk appointed by the Duties of 
Governor, one chief and two assistant gas inspectors, four inspectors employees. 
or testers of meters, one electrical inspector and three stenographers. 
All the salaries and expenses are paid by the gas and electric 
companies in proportion to their gross receipts. 

Office System. — Stenographic reports are taken of all hearings Complete 
and the original notes are firmly bound in black leather volumes records kept. 
which are then filed away in the vault. This is an excellent idea, 
apparently original with this board and worthy of emulation. The 
annual reports of the corporations are neatly bound when returned, 
those of private gas companies in one color, those of private electric 
companies in another and those of municipally owned plants in still 
another color. 

III. 

Rate Fixing. 

Chairman Barker pointed out that the Board does not have Rate complaints 
power on its own initiative to fix rates. He said that his Board must originate 
had discouraged legislation to that end, for the reason that the Wlin P u ^' c * 
public would then be inclined to lose their initiative in the matter 
of filing complaints and for the reason that the Board would then 
be subject to severe criticism for failure to institute investigations 
in certain cases. He pointed out, however, that when a reduction 
in rates is petitioned for by the Mayor or the Board of Selectmen 
or twenty consumers, the Board has the power to fix the rate. On 
other occasions the Board at times compels the reduction of a rate 
as a condition to the approval of a stock or bond issue. 



112 LOUIS SLOSS & CO. 



IV. 

Stocks, Bonds, Consolidation. 

There is hardly ever any opposition in cases of this kind. 

The Board hears the evidence presented and then itself 

goes carefully into the value of the plant and the financial 

condition of the company before issuing its certificate. In 

the year 1910, twenty-nine applications for approval of 

issue of stocks and bonds were decided. The amount of 

security asked for was $3,803,400, and the amount approved 

Examples of $2,969,600. The Board at times imposes conditions to its 

conditions permission ; for instance, that a certain amount of the 

imposed by ca pj ta i s tock should be written off, or a dividend reduced 
Commission. , . . , 

or an assessment made to bring up the capital account. 

The policy of this Board, as well as the experience of the 
New York Commissions of both districts, shows the 
necessity of giving to the Commission the power to impose 
conditions on the approval of stock and bond issues. 

The Massachusetts Board has the power, on granting 
applications for issues of bonds, and it is its duty, to 
Commission determine the price for which the bonds shall be sold. This 
determines P*\ c z is an unpleasant duty and nobody is ever satisfied with the 
jor b ic fe c { s i on Q f ^g Board on this question. 
bonds may be ^ 

sold. 

V. 

New Gas or Electric Plants. 

Sections 25 and 26 of the statute provide that no gas or electric 

Public Utilities company shall use the streets of a city or town without the consent 

btain f ^g mavor or aldermen or selectmen granted after notice by 

. . publication and a formal hearing. Section 27 provides that any 

person aggrieved by the decision may within thirty days appeal 

to the Board of Gas and Electric Light Commissioners, whose 

decision shall be final. Chairman Barker told me that appeals 

were taken in practically all cases and that in only one or two 

cases had the Board permitted the second utility to come into the 

field. While his Board has not put itself on record as formulating 

any definite policy in this matter, these results speak for themselves. 



REPORT OF COMMISSIONER THELEN. H3 

I referred to objections which I had heard concerning this policy 

as applied to railroads, whereupon Chairman Barker answered 

that there is no remedy so sure or so speedy to secure adequate 

service by the existing company as the power of the Board to grant Adequate service 

or withhold a certificate to a second company. secured by 

In answer to the suggestions that such a course of procedure re ° u a ]?V °* 
. . vi • r i • r i i- competition. 

might soon dissuade new companies rrom making further applica- 
tions, Mr. Barker said that it is always easy to stir up an agitation 
for a citizens' or other new gas or electric company if the service 
of the existing company becomes too poor. 

VI. 

Accounts. 

The Board has prepared a carefully worked out form of accounts 
and reports, which aims at simplicity, so that the matters presented 
shall help the public ascertain the simple question as to whether 
the company is or is not making too large a profit. This commis- 
sion has done the pioneer work of the country in the matter of the 
prescription of forms of accounts for gas or electric companies. Cas and electric 
When the California Commission secures jurisdiction over gas and a 
electric companies, it will do well to examine carefully the forms 
prescribed by the Massachusetts board, copies of which were 
sent to the California Commission at my request. 

VII. 

Litigation. 
In all its history, this Board has had only a single case in court. Little litigation 

c. 

BOARD OF HIGHWAY COMMISSIONERS. 

This Board, among other powers, has jurisdiction over all tele- 
graph and telephone companies within the state. I was unable to 
visit the Board. 



114 LOUIS SLOSS & CO . 

New York. 

FIRST DISTRICT. 
I. 

Introduction. 

The extent of this Commission's jurisdiction has already been 
discussed while considering the Commission of the second district. 
Commission As there stated, its office is in New York City. The largest portion 
controls subways of the work of the Commission of the first district arises from its 
transit contro ^ over subways and rapid transit, as the successor of the 
Board of Rapid Transit Commissioners of New York City. Out 
of 489 employees of the Commission in June, 1911, 272 were 
directly and solely concerned with this branch of the work. Two- 
thirds of the running expenses of the Commission, irrespective of the 
cost of the construction of subways, are directly chargeable to this 
branch of the work. The Commission has but little to do with 
steam surface railways. Such of these railroads as have their 
terminus in New York City keep up adequate service and facilities 
without any action on the part of the Commission. The extent 
of these railroads within the city of New York is so small that 
no questions affecting the rates within the city of New York have 
arisen. Apart from its subway work, the attention of the Com- 
mission is directed largely to street railways and to gas and electric 
plants within the city of New York. 

II. 

Organization and Office System. 

Personnel of The Commission. — The Commissioners are William R. Willcox, 
Commission. Chairman, Milo R. Maltbie, John E. Eustis, Wm. McCarroll and J. 
Sergeant Cram. Chairman Willcox was practising law at the time of his 
appointment by Governor Hughes. Mr. Maltbie is a Ph.D. of 
Columbia University, a thorough student of political economy and 
a hard worker. He does most of the public writing for the Com- 
mission and also works out and writes a large portion of the opinions 
of the Commission. He and Commissioner Bassett, whose term 



REPORT OF COMMISSIONER THELEN. 115 

recently expired, did most of the work in connection with stock 

and bond issues. Mr. Eustis is a lawyer. Mr. McCarroll was 

formerly a leather merchant. Mr. Cram was recently appointed by 

Governor Dix in place of Commissioner Bassett, who was regarded 

as an extremely efficient commissioner. 

As is the case in the second district, the commissioners of the 

first district are appointed by the Governor and devote their entire 

time to the work. Their salary is likewise $15,000 a year. Salaries of 

. . i r 11 • Commissioners. 

The Office. — The office is divided into the following bureaus: 

(a) Executive. Bureaus. 

(b) Chief Engineer. 

(c) Transportation engineer. 

(d) Gas and electricity. 

(e) Franchises. 

(/) Statistics and accounts. 

(a) Executive. — The secretary, Travis H. Whitney, is a 
member of the class of 1900 at Harvard and of 1903 at the 
Harvard Law School. He has the work of the office exceptionally 
well in hand, and directs, with considerable ability, the administra- 
tive work of the Commission. The executive office apart from the Executive offices. 
secretary, consists of the counsel and his office, and of sixty-four 

employees, of whom thirty-two are clerks, and sixteen stenographers. 
Among the other employees, are two assistant secretaries, one 
librarian, one purchasing agent and one photographer. 

(b) Chief Engineer. — The attention of the chief engineer and 

his department is confined entirely to subway construction work. Control of 
The chief engineer has an office force and an engineer of subway subway 
construction, under whom are six divisions and a sewer division , 
and a division of design. There are two hundred and seventy-one 
men directly under the chief engineer. 

(c) Transportation Engineer. — The transportation engineer, in 
addition to his office force, has divisions of transit inspection, equip- 
ment inspection and accidents and complaints. The division of 
transit inspection employs forty-three persons, including thirty-two 



116 LOUIS SLOSS & CO. 

inspectors and six or eight assistant engineers. The division of 
equipment inspection consists of ten railway engineers, five electrical 
engineers and one inspector. The division of accidents and com- 
plaints consists of one assistant electrical engineer and five inspectors. 

(d) Gas and Electricity. — The gas and electricity bureau 
consists of thirty-three employees, among whom are one secretary, 
six inspectors and twenty-three gas meter testers. 

(e) Franchise Bureau. — The franchise bureau consists of the 
chief of bureau and ten employees. 

(/) Division of Statistics and Accounts. — This division con- 
sists of the chief statistician and seventeen employees, including five 
statisticians and six accountants and six stenographers and clerks. 
Budget. The budget is about $1,000,000 a year. The state of New 
York pays the salaries of the Commissioners, the counsel and the 
secretary and the city of New York pays the other expenses. The 
city bears its share of the expenses by means of short term notes 
which are placed in the next year's city budget as a part of the 
city's indebtedness. For printing alone, apart from the subway 
and rapid transit work, the Commission last year spent over 
$35,000.00. 

Office System. — The secretary is the administrative head of the^ 
Secretary is Commission. I observed the number of men coming into his office 
administrative during the two days I was there and can bear witness to the very 
head. J ar g e number of persons whom he sees during the day. These 
are partly members of the office force coming to him for their 
instructions and rendering reports to him, partly representatives of 
the press and partly third parties. The secretary handles all the 
mail. A stenographer opens the mail early in the morning and 
writes on a tag, in duplicate, the general nature of the letter, with 
a reference to the person who wrote it. An assistant secretary 
then stamps on the tag a reference to the person or department to 
whom the letter is to go. When the secretary arrives in the office, 
he glances over the letters and tags, and the letters are then dis- 
tributed. One of the duplicate tags goes with the letter and the 
other is kept in the secretary's office and filed, so that he can 
determine at once to whom the letter was assigned. When the 



REPORT OF COMMISSIONER THELEN. U7 

letter is returned with its answer, the second tag is taken off and 
filed with the first. The secretary personally signs all letters which 
go out, except those of the legal and engineering departments. The 
secretary also prepares carefully the work to be taken up by the 
Commission at its meetings. 

III. 

Legal Department. 

The legal department is headed by James S. Coleman, counsel 
for the Commission, who receives a salary of $10,000.00 per year. 
His office force consists of five assistant counsel, two junior assistant 
counsel, a secretary to counsel, four stenographers and four clerks. 
One assistant counsel draws all the orders in stock and bond cases 
and similar matters, besides taking care of legislation affecting the 
Commission. Another counsel and two assistants handle the Com- 
mission's rapid transit and subway work. Another assistant counsel 
has charge of matters arising out of the railroad law, such as grade 
crossings, service and the like. 

This Commission seems to have more legal work than any other Much litigation. 
railroad or public service commission in the United States. This 
condition arises partly from the large number of contracts and 
agreements which must be prepared in connection with the Com- 
mission's subway work, and partly from the fact that this Commission 
seems to have more litigation than any similar commission. The 
large amount of this litigation seems to be due to three causes: Causes. 

1 . Unfavorable judges. 

2. Antagonistic corporations. 

3. Action on the part of the Commission in exercising powers 
which the courts later hold are not conferred by the act. 

Writ of Review. — The original intention of Governor Hughes 
and the framers of the statute was that there should be no appeal 
or review of an order of the Commission, the complainant being left 
to his remedy by injunction. The state courts, however, held that Legislation. 
the remedy of review prescribed by the code of civil procedure 
would lie. The Commissioners are strongly opposed to the right 



118 LOUIS SLOSS & CO. 

of review and are apparently preparing to amend the statute so 
as to take away this right, as soon as they can secure a favorable 
legislature. One of the assistant counsel showed me the transcript 
in the Third Avenue case. The printed volumes of the transcript 
are at least two feet high. The corporations, in presenting their 
cases, put in every conceivable kind of testimony, and the Com- 
mission itself includes the voluminous reports and records which it 
may have considered in arriving at the decision. 

Mr. Coleman strongly favors the right of review and points out 
that trial by injunction would take much longer and would be far 
more cumbersome than review. He might also have pointed out 
that in the absence of the right of review in the state courts there 
is nothing to prevent a corporation from going at once to the federal 
courts for an injunction, freed from any condition which the legisla- 
ture may prescribe for such cases in the state courts. 

Attitude of Litigation. — The New York state judges have on every possible 
Courts, occasion whittled down the powers of the Commission. The lower 
federal judges seem also to be unfavorably inclined. The famous 
Consolidated Gas case, which was finally decided in favor of the 
Commission in the United States Supreme Court, was decided 
adversely to the Commission in every inferior court. The following 
are some of the leading cases affecting the powers of the Commission: 

Particular cases. »• Willcox vs. Consolidated Gas Company, 212 U. S. 40. 

In this case, the Supreme Court of the United States finally 
sustained a statute fixing the price of gas at 80 cents. 

b. Long Acre Electric Light and Power Company Case. 

In this case, the Commission, on general grounds of public policy, 
refused authority for the issue of stocks and bonds of the newly 
formed Long Acre Electric Light and Power Company. The 
Commission regarded the matter as simply an effort on the part 
of the applicant to secure the desired permission so that it might 
then be in a position to force a sale to the Consolidated Gas 
Company. The courts reversed the order of the Commission, deny- 
ing the desired authority, and the Commission thereupon on July 28, 
1911, while I was visiting them, finally granted the desired 
certificate. 



REPORT OF COMMISSIONER THELEN. 119 

c. South Shore Traction Company Case. 

This was an application to build an electric railway from Queens 
County over the Queensborough Bridge into Manhattan. The 
Commission found that public convenience and necessity would be 
subserved by the construction of the contemplated railway, but held 
that the franchise granted by the city of New York did not 
sufficiently protect the city because it did not provide sufficiently 
for the use of the bridge by possible later companies. The court 
overruled the Commission, on the ground that the Commissions 
power as to franchises was merely a perfunctory power of approval, 
without the right to impose conditions or qualifications. 

d. The Third Avenue Railroad Case. 

This was a case of reorganization. The Commission refused to 
authorize the issue of some $73,000,000 of stocks and bonds, on 
the ground that the real value of the plant was not over 
$58,000,000. The court held that under a proper construction 
of the language of the statute as to reorganization, the companies 
had the full power to issue up to the combined stocks and bonds 
of the component companies and that the Commission had no power 
to impose any condition which would lower this total, even for 
the purpose of squeezing out water. These people applied twice to 
the Commission and were twice refused. The decision of the 
appellate division overruling the Commission was handed down on 
June 21, 1911. The Commission intends to appeal the case. 

IV. 

Stocks and Bonds. 

Apparently the most important work of the Commission, Security issues 
apart from its subway and rapid transit work, is that in must have 
connection with applications for approval of stock and bond approval of 
issues. The rules of procedure in these matters are similar 
to those of the second district already referred to. The 
Commission makes a very thorough investigation in each 
case, and, as a part of its inquiry, at times makes a 
physical valuation of the plant. There is considerable 
question, as a matter of law, whether the Commission has 



Commission. 



120 LOUIS SLOSS & CO. 



been granted the power to impose conditions on the 
granting of the desired permission. The Commission acts 
on the theory that it has this right, and often imposes 
A typical order, quite a number of conditions. A typical order was issued 
on July 28, 1911, in the matter of the application of the 
Long Acre Electric Light and Power Company for 
authority to issue $10,000,000 of preferred stock and 
$50,000,000 of bonds to be secured by mortgage on its 
property. The Commission's order authorized an issue of 
$2,000,000 of capital stock and of $50,000,000 of bonds, of 
which bonds, however, only $4,000,000 may at present be 
issued. After specifying the purpose for which the money 
may be used, the order sets out the following conditions: 

Conditions 1. No bond shall issue until the existing mortgage has 
of order, been satisfied. 

2. $2,000,000 of bonds may issue only when $1,000,000 
of new stock has been fully paid in. The same condition 
governs the second $2,000,000 of bonds. The bonds may 
not be sold at less than 90 per cent of par, and the proceeds 
must be applied as specifically directed. 

3. If the company proposes to sell the bonds for less 
than 90 per cent of par, it must publish notice of the sale 
and permit a public bidding under the control of the 
Public Service Commission. 

4. Discounts, commissions and expenses shall not 
exceed $400,000 and shall be amortized out of the income 
of the company before July 1, 1961. 

5. The company must keep full accounts of receipts 
and applications of proceeds of sales and make each month 
a verified report of the same to the Commission. 

6. No proceeds shall be spent until an itemized bill 
therefor has been submitted to the Commission. 

7. Stocks and bonds, under this authority, must issue 
prior to July 1, 1913. 



REPORT OF COMMISSIONER THELEN. 12 



8. A duplicate original of the mortgage must be filed 
with the secretary of the Commission. 

Commissioner Maltbie states that in his judgment the Discussion of 
present law concerning applications for approval of stock P°"CP regarding 
and bond issues is satisfactory, except that the statute . s oc ^ a1 
should clearly confer upon the Commission the power to 
prescribe conditions on the issue of stocks and bonds, 
should make the power of the Commission apply to 
reorganizations, and should provide, in addition to its 
present provisions, that notes of a corporation running 
for less than a year can not in turn be replaced by other 
notes. 

The street railway conditions in New York City show Securities of New 

very clearly the necessity of public control over the issue York City 

of stocks and bonds. Although New York City is the rallla,a ^ 

. . properties. 

richest passenger traffic territory in the country, every 

street railway company in that city is in the hands of a 
receiver. The reason is that every time any of the extremely 
numerous organizations and reorganizations in street 
railway properties were effected, the amount of capital 
stock was increased and the issue of bonds was augmented. 
The result is that today these companies are vainly trying 
to pay interest on a tremendous amount of watered capital 
and excessive bond issues. It further follows that the 
companies have no money for the betterment of the 
service or for the purchase of necessary additional equip- 
ment or facilities. The investing public has suffered 
because of excessive capitalization, and the traveling public 
because of inability to improve service, facilities and 
equipment. If at the time these organizations and reorgan- 
izations started, an efficient state commission had had 
control of stock and bond issues, the present condition of 
affairs would never have resulted. 

V. 

Certificate of 

Certificates of Public Convenience and Necessity public necessity 

required before 
Section 53 of the Public Service Commission law, referring to beginning 
railroads, street railroads and common carriers, and similar sections construction. 



122 LOUIS SLOSS & CO. 

applicable to gas and electric companies and telegraph and telephone 
companies, provide that no company shall begin the construction of 
its plant without first securing from the Public Service Commission 
a certificate of public convenience and necessity. Dr. Wilcox told 
me that the public service field had already been so thoroughly 
covered in New York City that very few applications have been 
made or will be made for certificates of public convenience and 
necessity. No such application has been made with reference to 
gas and electric companies. Apparently no case has arisen as to 
railway companies except the South Shore Traction Company case, 
supra, in which case, Commissioner Bassett specifically found that 
public convenience and necessity existed but refused a certificate 
because of disapproval of certain provisions of the franchise granted 
by the city. 

VI. 

Approval of Franchises. 

The sections referred to in section V hereof further provide that 

Commissioner tne corporations therein specified shall not exercise any franchise or 

must approve right not theretofore lawfully exercised without having first secured 

before franchises th e permission and approval of the proper Commission. The statute 

na f f contains similar provisions with reference to the transfer of franchises 
exercised. 

or stock. In the South Shore Traction Company case, the court 

held that the Commission does not have the right to refuse approval 

to the exercise of a franchise, except in so far as the public safety 

is affected. If this is the law, the statutory power in this respect 

is at present largely ineifective. 

VII. 

Franchise Bureau. 

The Commission of the first district is the only commission in the 
country which has a special franchise bureau. The head of the 
bureau is Dr. Delos F. Wilcox, a Ph.D. of Columbia, author of 
"Municipal Franchises" and a number of pamphlets and magazine 
articles, and an unusually well posted man. Dr. Wilcox has made 
a thorough study of all the organizations and reorganizations, 



REPORT OF COMMISSIONER THELEN. 123 

mergers and consolidations, affecting the public service corporations 
of this district and of all the franchises which have been granted 
to them. He furnished the material from which Commissioner 
Maltbie published a two hundred and thirty page book on "Fran- 
chises of Electrical Corporations in Greater New York," accom- 
panied by an illuminative chart. 

Reports and documents from companies. — This bureau secured 
from each company subject to the jurisdiction of the Commission a 
certified copy of each document affecting its organization, reorgan- Statistical data. 
izations, consolidations, mergers, etc., and of every deed, franchise, 
lease or agreement and all miscellaneous documents affecting its 
corporate existence. The bureau has secured a very large number 
of these documents and has filed them by companies, each document 
in a separate file with a number. A card index is arranged by 
original companies. As to each such company, the index has 
subheads for certificate of incorporation, franchises, leases, operating 
agreements, etc. Maps secured from the companies in connection 
with their franchises are also indexed but separately filed. 

Franchise books. — Dr. Wilcox's office has prepared blue prints 
showing the history of every franchise that has been granted within 
the limits of the city of New York. Each map shows some 
franchise or franchises, trackage actually used and trackage owned 
and trackage operated under lease, with appropriate references. 
Along the edges of the print, Dr. Wilcox has written historical data 
showing the history of each franchise. These maps follow each 
other in chronological order and are pasted into four large scrap 
books, one book for each borough. 

History charts. — Dr. Wilcox has also prepared charts showing 
diagrammatically the history of each company performing a certain 
kind of service, with the original organization and all successive 
organizations, reorganizations, mergers, consolidations, receiverships, 
etc., including the stock owned in other corporations. These charts Franchise 
show as to each kind of public service, a large number of original charts. 
companies gradually merging into one or two which now control the 
situation. Copies both of franchises and history charts in so far 



124 LOUIS SLOSS & CO. 

as they affect electrical corporations will be found in the book of 
"Franchises of Electrical Corporations in Greater New York," 
above referred to. 

Value of franchise compilations. — The franchise compilations so 
prepared are of great assistance to the Commission in the matter 
Franchise of the approval of stock and bond issues and may also be used as 
cords, th e Das j s f or ac ti ons to forfeit a considerable number of unused 
franchises. This data also shows that in some cases the public 
service corporations are using the streets of the city of New York 
without any franchise at all. 

There is no statutory provision in New York for an indeterminate 
franchise, similar to that of Wisconsin, except in the Rapid Transit 
Act, affecting the subways and the rapid transit system of New 
York City. 

VIII. 

Physical Valuation. 

The Commission has made no physical valuations except in 
connection with a few matters of approval of stock and bond issues. 

IX. 

Newspapers. 

Publicity T» or % yh e relationship between the Commission and the press is very 
.ommission. c j ose ^n Associated Press correspondent has his office with the 
Commission. The first assistant secretary spends almost his entire 
time in preparing for the press statements of what the Commission 
is doing, including abstracts of opinions. While I was in the office, 
a constant stream of newspaper men kept coming in for news. 
Secretary Whitney lays great stress on this part of the Commis- 
sion's work. He suggests for California a card index of all the 
newspapers of the state with their affiliations, dates of publication, 
owners, etc., and a system of sending out statements to all news- 
papers which are willing to run Commission news. 



REPORT OF COMMISSIONER THELEN. 125 

X. 

Library. 

The Commission has employed Dr. Whitten, another Columbia 
Ph.D., who receives a salary of some $3,600.00, and spends his 
entire time in collecting a library of reference books and reports Reference books. 
and newspaper clippings and magazine articles, referring to the 
subject-matter of the Commission's work. The Commission's library 
is by far the most complete of any railroad or public service com- 
mission visited by me. 

XL 

Accidents. 

Immediate notice of every accident is given to the Commission Accidents must 

by telephone or telegraph. One of the Commission's inspectors is y e reported 

on the ground within a few moments and takes the names of the l !? m l \ a f ^ 
, , . f . , f , Commission. 

witnesses and gathers information concerning the cause or the 

accident. The Commission has a photographer who takes photo- 
graphs of the surroundings whenever applicable. In serious cases, 
the Commission also holds a hearing of its own. In case of death, 
it always sends a representative to the coroner's inquest. Within 
twenty-four hours after the accident, the company must send in a 
written report. 



Maryland, 



Introduction. 

The Public Service Commission of Maryland was created by Jurisdiction. 
Act of April 5, 1910. The Commission has jurisdiction over all 
railroads of every kind, common carriers and gas, electricity, tele- 
phone, telegraph and water companies. The Commission started 
work in May, 1910, and is still in the formative stage. 

The statute seems to have been modeled very largely on the New 
York Act and partly on the Interstate Commerce Commission Act. 



126 LOUIS SLOSS & CO. 



II. 

Organization and Office System. 

Personnel. The Commission. — The commissioners are James M. Ambler, 
Chairman, Philip Laird, and Joshua W. Hering. Chairman 
Ambler is an attorney. Dr. Hering is a practicing physician. 

Employees. — The Commission has a counsel and assistant counsel. 
The secretary is Louis M. Duvall. There are several clerks in the 
office. The Commission's engineer is now engaged in making a 
physical inspection of the public service corporations of the state, 
preliminary to a physical valuation. 

III. 

Stock and Bond Issues. 

Maryland The Maryland Statute contains provisions similar to 
statute modeled those of the New Y ork Statute with reference to the 

i A j approval by the Commission of issues of stocks and bonds. 
statute, as to J 

stocks and While I was visiting the Commission, they were consid- 
er* Js. ering an application of a proposed railroad for permission 
Discussion of to construct a railroad and for an approval of a stock 
particular case, and bond issue. The promoters intended to utilize a 
roadbed constructed some twelve or thirteen years before, 
largely from state and county moneys, and to secure their 
funds from a popular subscription. The promoters had 
not secured permission from the county authorities to cross 
the public highways nor had they filed with the Com- 
mission the data required in the Commission's rules of 
procedure. The Commission was inclined to withhold 
consent, at least until the necessary franchise for crossing 
the public highway had been secured from the county 
authorities. The Commission's disinclination to permit the 
establishment of any more grade crossings entered largely 
into the case. The attention of the Commission seemed 
to be directed very largely to the question of the certificate 
of public convenience and necessity and not so much 
attention was paid as to the amount of the stock or bond 
issue which should be authorized. 



REPORT OF COMMISSIONER THELEN. 127 

As above stated, this Commission is in its formative 
period. It gives every indication of doing good work when 
it is fairly under way. 

INTERSTATE COMMERCE COMMISSION. 

While with the Interstate Commerce Commission, I paid partic- 
ular attention to matters of litigation and to the investigaion which 
the Commission is now carrying on into the express rates of the Investigation of 
country. I also conferred with the Post Office Department in the ex P ress rates - 
matter of certain data which they have secured from the railway 
companies as to all kinds of passenger train service, including express 
and mail. 

I also examined the Commission's filing system and was shown 
the method of handling both formal and informal complaints from 
the time of their filing to their final disposition. 

The Commissioners were all out of town on their vacations, so 
that I had no opportunity to discuss with them any of the problems 
of public regulation and control of public service corporations. 



Georgia, 
i. 

Introduction. 

The Railroad Commission of Georgia was created by act of 
October 14, 1 879. This act provided for the appointment of 
three commissioners to serve for six years at an annual salary of« 
$2,500.00 with jurisdiction over all railroad companies except Jurisdiction. 
street railroads. It was made the duty of the Commission to 
establish rates of charges. By act of December 18, 1890, it was 
made the duty of the Commission to investigate all interstate freight 
rates affecting Georgia. The act of October 17, 1 89 1 , made it 
the duty of the Commission to inspect railroads, on complaint made, 
with respect to their safety. Another act of October 17, 1 89 1 , 
extended the jurisdiction of the Commission to the fixing of storage 
rates. The act of October 21, 1891, extended the jurisdiction of 



128 LOUIS SLOSS & CO. 

the Commission to express and telegraph companies, with power to 
fix their rates. The act of August 21, 1 906, provided that the 
commissioners should be elected instead of appointed. The act of 
August 22, 1907, gave to the Commission its present powers. It 
increased the number of commissioners from three to five and gave 
to the Commission jurisdiction over railroads of all kinds, common 
carriers, express companies, telephone, telegraph, dock, wharfage, 
gas, electric light and power and cotton compress companies. 

II. 

Organization and Office System. 

The Commission. — The commissioners are H. Warner Hill, 
Chairman, George Hillyer, O. B. Stevens, Chas. Murphey Candler, 
and Joseph S. Gray. Chairman Hill is a lawyer and has served 
on the Board some eight or ten years. In 1907, Governor Hoke 
Smith removed Joe Brown, then chairman of the Board. The 
governor appointed a member in place of Brown and the law was 
thereafter amended so as to add two commissioners, making five, 
Commissioners the two new commissioners to be appointed by the governor. Judge 
appointed. Hillyer was appointed by Governor Smith in 1907 and is likewise 
a lawyer. Mr. Candler fathered the present railroad commission 
law in 1907 and was likewise appointed by Governor Smith. Mr. 
Stevens is a farmer. Mr. Gray is a railroad man. The statute 
provides that the chairman shall devote his entire time to the duties 
of his office and that he shall receive a salary of $4,000. The 
other commissioners are paid $2,500 each and apparently do not 
have to devote any considerable amount of time to the work. 

Employees. — The employees of the Commission consist of Camp- 
bell Wallace, secretary; J. Prince Webster, rate expert; an assistant 
rate expert and a stenographer. The Commission has no engineers 
or inspectors or accountants. 
Budget. The budget is twenty-eight thousand seven hundred dollars per 
year, of which twenty-three thousand seven hundred dollars is paid 
for salaries, leaving three thousand dollars for contingent fund and 
two thousand dollars for printing. The Commission is very much 
handicapped for lack of money. Though the act of 1907 makes 



REPORT OF COMMISSIONER THELEN. 129 

it the duty of the Commission "to ascertain the cost of construction 
and present value of the properties in Georgia" owned by each of 
the public service corporations over which the Commission has 
control, nothing has been done for the reason that the legislature 
has provided no funds. As the contingent fund of three thousand 
dollars must pay the traveling expenses of the commissioners and 
most of the expenses of running the office, very little money is left 
for any work outside of the office. 

Office System. — The office correspondence is very carefully 
indexed in a bound index book. No card system or letter press 
books are kept. The incoming mail seems to consist largely of 
weekly passenger train reports, accident reports and general inquiries. 

III. 

Legal Department. 

Judge Hines is special attorney for the Commission. His chief Little litigation. 
work is to write opinions on matters submitted to him by the Com- 
mission. The Commission has had almost no cases in court. In 
1902, the Commission lowered passenger fares and also freight 
rates. The federal courts refused to issue an injunction in the 
passenger case, preferring to wait to see whether the fares would 
prove confiscatory. In the freight case, however, a temporary 
injunction was issued by the federal court. The case has not as 
yet been decided by that court. In the mean time, no further 
reductions in freight rates have been made by the Commission. 

IV. 

Rates. 

The statute provides that "the power to determine what are Rate making 
just and reasonable rates is vested exclusively in the Commission." P ola?er invested m 
Under this power, the Commission in 1880 established maximum 
freight and passenger distance tariffs with a table of distances and 
also a freight classification table. Changes in these tables are 
made from time to time, especially in the classification tables. The 
carriers file with the Commission all new tariffs, and these, under a 



130 



LOUIS SLOSS & CO. 



general order, become the maximum tariffs of the Commission, 
unless the rates are in excess of those theretofore established in the 
maximum tariffs. Under general order of the Commission, no 
railroad company can change a freight or passenger schedule or 
discontinue the same without permission from the Commission. The 
Commission has placed the railroads of the state in different classes 
as to both passenger and freight business, and permits the members 
of a different class to charge different maximum rates and fares. 



V. 

Stock and Bond Issues. 

Commission Section 8 of the act of 1907 gives the Commission power 
controls issue of to control all issues of stock and bonds and contains 



stocks and bonds. 



A particular case. 



Foreign 
corporations. 



provisions similar to those in the New York law, upon 
which it was modeled. The Commission has adopted the 
most detailed rules which I have seen concerning the 
contents of the petition for the approval of such issues. 
The Commission hears the evidence presented, but appar- 
ently does not send any one out to look at the petitioner's 
property. The Commission has no money available for 
this purpose. 

The Seaboard Air Line Railway in 1910 applied for 
and was granted permission to issue $150,000,000 of bonds. 
This is a foreign corporation. It stated to the Commission 
that, in its judgment, the Commission had no jurisdiction 
for the reason that the applicant was a foreign corporation, 
but that it desired to remove any possible doubt. After 
securing the authority, the railroad refused to comply with 
the order of the Commission to report the disposition of 
the securities, and the use made of the money, and Judge 
Hines reported to the Commission that it had no authority 
to compel the report. Chairman Hill suggests the advisa- 
bility of making sure that the statutes prescribe a penalty 
for failure to furnish these reports. 

Apparently very little thought has been given by any 
of the states to the question as to whether a state has the 



REPORT OF COMMISSIONER THELEN. 131 

right to insist on approval by its Commission of issues of 
bonds, notes or other evidences of indebtedness by foreign 
corporations, affecting property within the state. 

VI. 

Express Rates. 

The Southern Express Company is the only express company 
within the state. The Commission several months ago instituted an Investigation of 
investigation into the rates, rules and regulations of this company ^ouf/iern Express 
and prepared a list of questions asking for information. The 
Commission has not hitherto taken any steps to ascertain the cost 
of the railroad end of the express service. 

VII. 

Public Utilities. 

These have been under the jurisdiction of the Commission since 
1907. Only two cases involving the rates of such companies have 
come before the Commission. No system of accounts have been 
prescribed. The form of annual return provides for information 
concerning simply ten or twelve facts as to the financial operations 
of the companies. 

VIII. 

Telephone and Telegraph Companies. 
The remarks under section VII are applicable to these companies 



as 



well. 



IX. 

Court Review and Appeal. 

No review is provided for by the statute. Judge Hillyer tells 
me that whenever the action of the Commission is attacked, the 
procedure is one de novo for an injunction. The Commission is 
rather proud of the fact that, with the exception of the federal Litigation. 
proceeding above referred to, no adverse decisions have been 



132 LOUIS SLOSS & CO. 

rendered by the courts. The powers of the Commission have 
been uniformly upheld, ever since the case of Smith vs. Georgia 
Railroad, 70 Georgia, 694, in which case a decision in favor of 
the Commission was affirmed by the United States Supreme Court. 

X. 

Railroad Maps. 

This Commission, in common with almost all of the other 
State railroad railroad commissions, publishes at stated intervals a railroad map 
map. showing all the railroads of the state. The Georgia map shows 
on its back the census returns. 

XI. 

Passenger Train Delays. 

This Commission, in common with the Texas and Oklahoma 
Commissions, receives from each railroad every week a statement 
of all passenger train delays and the reasons therefor. These 
reports are then filed. The Commission does not have an inspector 
who can go out and personally investigate the delays. 

XII. 

General Orders, Rules and Regulations. 

Work of The Commission has prepared freight rules ; passenger rules ; 
Commission, rules governing railroad, express and telegraph depots, stations, 
agencies and offices; storage (demurrage) rules; telegraph rules; 
passenger and freight classification; rules, tariffs and classifica- 
tions governing express companies; and some nineteen general 
orders — which rules, regulations and orders are constantly referred 
to by the commissioners in their conversation. The commissioners 
spoke to me of the care exercised in framing these rules and orders. 
Many subjects covered by them, such as the establishment of tariffs, 
inhibitions upon the use of passes, the filing of accident reports, etc., 
are, in other states, provided for by specific statutory enactments, 
but have been covered in Georgia under the broad general powers 
granted to the Commission. 



REPORT OF COMMISSIONER THELEN. 133 



T 



exas. 

i. 

Introduction. 

The Railroad Commission of Texas was established in 1891, 
and has jurisdiction over steam railroad and express companies, but Jurisdiction. 
none over public utilities. An elaborate stock and bond law was 
approved on April 8, 1893. 

II. 

Organization and Office System. 

The Commission. — The commissioners are Allison Mayfield, 
chairman, Wm. D. Williams and Joseph R. Wortham. The 
commissioners were originally appointed by the governor for three Commissioners 
year terms, but the Constitution was amended in 1894 so as to e * ec ' e "« 
provide that the commissioners should henceforth be elected for six 
years. The commissioners receive a salary of $4,000.00 each. 
Governor Colquitt was formerly a railroad commissioner and seems 
to have been elected governor on the record which he made in that 
capacity. 

Employees. — The secretary of the Commission is E. R. McLean. 
The Commission also employs an engineer, an auditor, a rate expert 
and some four or five clerks and stenographers. The secretary 
receives a salary of $2,000.00 and the engineer $3,000.00. The 
Commission has no inspectors. The engineer seems to do all the 
inspection for valuations in connection with the stock and bond 
issues and any other inspection which may be necessary. The 
engineer of the Commission was formerly R. A. Thompson, who 
is regarded as one of the best railroad commission engineers of the 
country. 

III. 

Railroad Rates. 

The Commission fixes the moving rate. When the statute was 
passec\ the railroads had in effect distance tariffs in Texas. The 



134 LOUIS SLOSS & CO. 

Commission has used these tariffs as a basis and has established a 
distance table for class rates, some forty-seven commodity rate tariffs, 
and a class rate classification. The annual reports give the rate 
effective on each railroad. By reason probably of the fact that 
the rates were but little lowered at the outset, the railroads did not 
take the matter into the courts. The Commission from time to time 
makes alterations in the rates and classifications both on its own 
initiative and on petition from the carrier. If a carrier wishes a 
rate to be altered and writes a letter to the Commission stating its 
desire, the Commission, if favorable, grants the request by issuing 
a circular which is mailed to the applicant, to every railroad in the 
state and to other interested parties. The applicant does not file a 
tariff showing the proposed change, but the Commission issues its 
circular in its own form. 

There has been almost no freight litigation in the state. With 

Tiuo-cenfreference to passenger rates, the Commission ordered a 2 cent rate 

passenger rale'in on the Galveston, Houston and Henderson Railroad as a test 

declared case# T^g railroad promptly secured an injunction and ultimately 

or ^*won out on the ground of confiscation of property. The Texas 

passenger rate is now 3 cents per mile. 

IV. 

Emergency Rates. 

The act of April 5, 1 897, as amended on June 5, 1 899, gives the 
Commission power "when deemed by it necessary to prevent inter- 
state rate wars and injury to the business or interest of the people 
or railroads of the state, or in case of any other emergency to be 
judged by the Commission, to temporarily alter, amend or suspend 
any existing freight rates, tariffs, schedules, orders and circulars of 
any railroad or part of the railroad within the state." 
Manipulation of I was informed that the provision concerning the prevention of 
rates, interstate rate wars has little or no meaning. The real purpose of 
the provision was to give power to the Texas Commission to lower 
an intrastate rate from a producing to a consuming center in cases 
in which an interstate rate from a producing center outside of the 
state had been lowered, so as to lessen the differential theretofore 
enjoyed by the Texas producers. In cases of this kind, the Texas 



REPORT OF COMMISSIONER THELEN. 135 



Commission regulates the state rates so as to keep Texas markets for 
Texas producers. The fear that their intrastate rates within Texas 
will be lowered has prevented carriers from lowering their interstate 
rates. In a number of cases the railroads have written to the 
Commission asking whether it would have any objection to a reduc- 
tion of an interstate rate from Louisiana into Texas, and the 
Commission had uniformly replied that it would have such objection 
in any case in which Louisiana products would thereby come into 
competition with those produced in Texas. As a result of the 
Commission's uniform reply, the railroads in these cases have 
refrained from reducing the interstate rates. 

The rate expert told me that as far as he knew, this paragraph 
had never been attacked on the ground that the emergency rates 
were established without any notice whatsoever to the carrier and 
consequently without due process of law. We agreed that ft 
would be wiser to give some short notice, such as three days. 

V. 

Express Rates. 

Early in its history, the Commission established a distance express 
tariff applying on merchandise for every pound up to 1 00 ; a similar 
tariff for general specials; similar tariffs for certain commodities such 
as green and fresh fruits, melons and vegetables, beer and other 
liquors, mineral and spring water; also an express classification with 
rates and rulings. 

The Commission seems very largely to have established the rates Investigation of 
and regulations in effect at the time, so that no complaint was made ex P rc 
by the express companies. Later, when Commissioner (now Gov- 
ernor) Colquitt was elected, he started an investigation for a 
reduction of express rates. The Commission made an order reducing 
express rates (an early report states that the average reduction was 
about 20 per cent, although it is very questionable whether the 
reduction was in fact so large), whereupon the express companies 
at once enjoined the Commission, as is their usual practice in these 
cases. Mr. Colquitt took a mass of testimony in San Francisco 
and elsewhere. After some six or eight months, the matter was 
compromised by a new order making an average cut of some 8 per 
cent, and the rates established by that order are in effect today. 



136 LOUIS SLOSS & CO. 



VI. 

Department of Statistics and Accounts. 

Mr. W. F. Fitzgerald, who was for over twenty years auditor 
of the Southern Pacific Company, has charge of the work of this 
department. 
Railroads make The railroad companies make annual returns on the forms pre- 
annual reports, scribed by the Texas Commission. These forms are modeled on 
those prepared by the Interstate Commerce Commission for steam 
railroads. In addition to the information called for by the inter- 
state forms, the Texas forms provide for a segregation of operating 
revenue, both freight and passenger, into local, interline-interstate 
and interline-intrastate. The state returns call for a segregation of 
operating expenses into one hundred and sixteen accounts, based on 
those prescribed by the Interstate Commerce Commission. In 
addition to this information, the form calls for the following 
information : 

Information ] . As to passenger traffic, it calls for the number of passengers 

required of carr i e d, earning revenue, and the number of passengers carried one 

' mile as to local, interline-state and interline-interstate traffic. 

2. As to freight traffic, similar information is requested as to the 
number of tons carried earning revenue, and the number of tons 
carried one mile. 

3. As to train mileage, information is called for as to revenue 
freight, revenue passenger, revenue mixed, revenue special service, 
total revenue, train mileage and non-revenue totals as to freight, 
passenger and work trains. 

Information When the returns are filed with the Commission, they are care- 
carefully checked f u jj y cnec k ec I over by Mr. Fitzgerald and requests for corrections 
' and amplifications are frequently made by him. Before he took 
office, the reports were simply filed without being checked over. 
The returns are analyzed by Mr. Fitzgerald and appear in twenty- 
six carefully worked out statistical tables in the annual report of the 
Commission. The work of the Texas Commission in analyzing 
and tabulating the reports of the railway companies ranks with the 
work of the Massachusetts Commission as among the best in the 



REPORT OF COMMISSIONER THELEN. 137 



country and can be referred to with profit by the California Com- 
mission when it starts on this same work. 

The Commission receives also from each railroad a monthly Monthly railroad 
report of operating revenues, operating expenses, passenger traffic, re P 0Tts ' 
freight traffic and train mileage. Mr. Fitzgerald considers these 
reports valuable for the reason that they allow the Commission to see 
month by month just how the railroads are spending their money 
and thus enables the Commission to stop unauthorized expenditures. 
Texas and Oklahoma seem to be the only Commissions which 
require these monthly statements. 

Several years ago, the Commission promulgated its bookkeeping Commission 
rules Al and A2. Number A2, prescribing the keeping of prescribed form 
accounts so as to segregate operating expenses as to passenger and °' * e *" ' 
freight for each of the one hundred and sixteen accounts prescribed 
by the Interstate Commerce Commission, and also as to local, 
mterline-intrastate and interline-interstate, was enjoined in the district 
court of Travis County, in the suit of Texas and Pacific Railway 
Company vs. Railroad Commission of Texas. The district court 
in that case rendered judgment against the Commission; the case 
was recently decided on appeal in the court of Civil Appeals in 
tavor of the Commission. In this order, the Commission prescribed 
the bases of segregation, and the railroads severely attacked the 
same. These bases should be compared with those used by the 
Wisconsin Commission in the Buell case, those prescribed by the 
Oregon Commission and those used by Statistician James Peabody 
of the Santa Fe. 

The Texas Commission uses for express companies the form of Reports of 

return prescribed by the Interstate Commerce Commission. express ^ 

companies. 

VII. 

Valuation of Railroad Properties. 

The Railroad Commission Act provides that the Commission 
"shall ascertain as early as practicable the amount of money 
expended in the construction and equipment per mile of each rail- 
way in Texas, the amount of money expended to procure the rights 
of way and the amount of money it would require to reconstruct 
the railroad bed, track, depots and transportation, and to replace 
all the physical properties belonging to the railroads." 



138 LOUIS SLOSS & CO. 

Physical valuation Section 3 of the stock and bond law provides that "it shall be 
of railroads, the duty of the railroad commission to ascertain, and, in writing, 
report to the Secretary of State the value of each railroad in this 
state, including all its franchises, appurtenances and property." 

It will be noted that the directions contained in these two statutes 

differ with respect to franchise values. The duty imposed by the 

Railroad Commission Act is to ascertain the value of the physical 

properties of the railroads, whereas the duty imposed by the Stock 

and Bond Act is to ascertain the value of each railroad, including 

Value of all its franchises and appurtenances. It might well be that the 

railroad value of a franchise might be considered in determining the amount 

:s * of stocks and bonds which a railroad company may properly issue, 

while it would be improper to consider the value of that franchise 

for rate fixing purposes. I assume that some such idea is responsible 

for the difference in the language of these two statutes. 

The Texas Commission, in such valuations as it has made, has 

apparently acted under the terms of the stock and bond law and 

under that law has valued some 12,988.09 out of 13,819.44 miles 

of main trackage in the state. 

Methods of For the purpose of ascertaining the value of the railroads under 

ascertaining^ s t ck and bond law, blanks calling for values of (a) railroad 

physical valuation. he ^ ^^ ^ (fc) rolHng s[Qc ^ (c) m i sce Ilaneous— are handed 

to the railroads affected. Upon receipt of these returns, the engineer 
checks over the figures. Under the head of "c" appear street 
franchises, legal and engineering expenses and interest during con- 
struction, but not commissions and discounts. All general franchises 
are valued at 6 per cent of the value of the railroads and are then 
added to the totals derived by the addition of a, b, and c, for the 
purpose of covering such items as discount on bonds and contingencies 
which could not be considered in the scheme of valuation provided 
by law. 

No valuation under the stock and bond law has ever been con- 
tested in Texas. There was some talk when I was in Austin to the 
effect that the International and Great Northern Railroad would 
appeal from a recent valuation of the Commission, but nothing 
definite has been done in the matter. This railroad wished to issue 
bonds in excess of the amount which could be issued on the basis 
of the valuation made by the Commission. 



REPORT OF COMMISSIONER THELEN. 



139 



VIII. 

Stock and Bond Law. 

Texas has the most complete stock and bond law of 
which I know. It prescribes practically every detail, 
leaving little or nothing to the discretion of the Commis- 
sion. It declares that no bonds or other indebtedness shall 
issue, secured by lien or mortgage on railroad properties in 
Texas, above the reasonable value of the property, except 
that in case of emergency the issue may run up to 50 per 
cent in excess of such value. The Commission has confined 
emergencies to fire, flood or other acts of God. The statute 
provides for a valuation of railroad properties as described 
in paragraph VII hereof, with the right on the part of the 
company to a hearing before the Commission; for the filing 
by the Commission of its certificate of value with the secre- 
tary of state; for the authorization of the issue by the 
Commission; and for the registration of its bonds by the 
railway company with the secretary of state, with adequate 
penalties. 

As every railroad corporation doing business in Texas 
except the Texas Pacific (under a federal charter) and the 
Atchison, Topeka and Santa Fe, a leasing line, operates 
under a Texas charter, the question whether the stock and 
bond law applies to a foreign corporation has not arisen 
in Texas. 



Texas Stock and 
Bond Law very 
comprehensive. 



No securities may 
be issued in 
amount above 
value of 
property, 
except 



IX. 

Control Over Corporations. 

By providing that each railway shall keep in Texas an office for Stringent 
transfer of stock, that the directors must hold at least one meeting regulation of 
annually in Texas, that no railway company shall consolidate with railroad ^ 
any other railway company organized under the laws of any other 
state or the United States, and similar provisions in her constitu- 
tion and statutes, Texas has driven all the railway companies, 
except the two hereinbefore mentioned, to take out separate charters 
in Texas. This result has simplified the control in Texas over stock 
and bond issues. 



140 LOUIS SLOSS & CO. 



X. 

Depot Complaints. 

Commission I was informed that the Commission handles a large number of 

regulates C0 mplaints calling for the erection of additional depots or the 
station facilities. • r -n ^ • • l 

improvements or existing ones. 1 he Commission has no inspectors 

to send out on the line; the engineer performs all this work. The 

complainant presents his case, with a photograph where applicable, 

and the defendant its case, whereupon the Commission decides. In 

the important Dallas Union Depot case, the attorney general ruled 

that, as the statute now reads, the Commission cannot prescribe the 

exact site of a union depot, though it has authority to order the 

erection of such depot. The Commission, in its 1910 report, 

referring to union depots, recommends that the statute be amended 

so as to give to the Commission authority to fix the site for the 

location of such depots and also authority to enforce compliance 

with the orders of the Commission in the premises. 

XL 

Newspapers. 

Publicity of Ten copies of each circular changing rates and ten copies of any 
t»ort£ of s t a t emen t which may be prepared by the Commission for publication 

Commission. , 1 ri - .\ rr -r-i 

are placed on a newspaper hie in the office. 1 he reporters come 
in each day and take off the copies for their respective papers. The 
Texas Commission, in common with most of the wide awake Com- 
missions of the country, lays great stress on the matter of publicity. 



Oklah 



oma. 

i. 

Introduction. 

The Corporation Commission of Oklahoma was created by section 

15 of article 9 of the Constitution (1907) and most of its powers 

Jurisdiction, and duties are defined by the Constitution itself. The Commission 

has jurisdiction over railroad, express, telegraph, telephone, oil pipe, 



REPORT OF COMMISSIONER THELEN. 141 

car companies and, at least to a certain extent, over heat, light, 
power and water companies. Some of these latter utilities have 
denied the right of the Commission to regulate their rates. The 
Commission also claims the right under another section of the Con- 
stitution to regulate and fix the price of any article as to which a 
monopoly exists, and under this section has in certain cases fixed 
the rates of ice and lumber. 

The Commission has twice asked the legislature to pass a statute Control of 
giving to it control over the issues of stocks and bonds. The statute slock and 

. U A ' 

as proposed specified that the sum of stock and bonds should not bortd lssues - 
exceed the value of the property except in emergency cases when 
the total might run up to 50 per cent in excess of the value. The 
Commission likewise has no control over the exercise of franchise 
rights or the commencement of construction of a plant. The munici- 
palities themselves determine these matters and uniformly grant the 
new companies the desired permission to enter the field. 

II. 
Organization and Office System. 

The Commission. — The commissioners are J. E. Love, chairman, Personnel of 
A. P. Watson, and George A. Henshaw. Mr. Love is a cattle Commission. 
raiser. Mr. Watson is about 64 years of age, a farmer and formerly 
a colonel in the Confederate Army. Mr. Henshaw was formerly 
Assistant Attorney General and was a member of the Oklahoma 
Constitutional Convention. The Commission is one of the most 
active in the country. The commissioners devote all their time to 
the duties of their office. They are elected at large for terms of 
six years and receive an annual salary of $4,000 each. 

Employees. — The office is divided into the following depart- Departments. 
ments : 

1 . Executive. 

2. Auditing. 

3. Engineering. 

4. Rate. 

5. Telephone. 

6. General corporation records. 



142 



LOUIS SLOSS & CO. 



Sal 



aries. 



Appropriations, 



The law and executive clerk, E. C. Patton, receives a salary of 
$2,000.00; the rate expert, Mr. Bee, $3,600.00; the auditor, 
Mr. Stout, $2,500.00; the telephone expert, Geo. P. Player, 
$2,500.00; the engineer $3,000.00; and the corporation record 
clerk $2,200.00. In addition to these men, the Commission 
employs an assistant engineer and two or three tariff men; several 
assistants to the auditor; two or three assistants each to the rate 
expert, the telephone expert and the corporation record clerk; and 
several official stenographers and some four or five office stenographers. 

For the two years from July 1, 1909, to June 30, 1911, the 
legislature appropriated for salaries, printing and court expenses 
$60,200.00; for contingent expenses $120,000.00; and for rate 
litigation in the federal courts $50,000.00 — being a total of $230,- 
200.00 for two years, or $1 15,100.00 for one year. For details 
of the contingent account, see the 1909-1910 report, at page 11. 



III. 

Court Procedure. 

Appeal direct to Section 20 of Article IX of the constitution provides that from 
Supreme Court the orders of the Commission therein specified, an appeal may be 
taken directly to the State Supreme Court. The constitution does 
not specify the time within which the appeal may be taken, but 
Discussion. Commissioner Henshaw told me that the courts had ruled that it 
may be taken at any time within a year. The constitution provides 
that such appeal may be taken in designated cases only, as from 
orders prescribing rates, charges and classifications, and that the 
legislature may also provide by general laws for appeals from 
orders of the Commission in other cases. Mr. Patton pointed out 
the importance of the limitation just noted. When the Commission 
made its important accounting order (No. 50), the corporations 
asked the Commission to approve a supersedeas bond, which the 
Commission refused to do, on the ground that this was not a case in 
which an appeal would lie (June 29, 1909). On June 30, 1909, 
the supreme court denied the request of the petitioners for a super- 
sedeas on the ground that this was not an appealable case. Mr. 
Patton pointed out other cases, such as cases of request for 
information to be used in pending litigation, in which the Com- 
mission's hands should not in his judgment be tied. 



REPORT OF COMMISSIONER THELEN. 143 



Section 21 provides that the supreme court may grant a writ of Supreme Court 
supersedeas, but that it cannot do so until a suspending bond shall m ^ §rantwrit 
first have been approved by the Commission in an amount sufficient 
to insure the payment of all charges in excess of those finally estab- 
lished by the court on appeal. The Constitution provides that the 
Commission must thereupon forthwith direct the appealing company 
to keep such accounts as in the judgment of the Commission may 
suffice to show the amounts being charged or received by the 
company in excess of the charge allowed by the Commission, 
together with the names and addresses of the persons to whom such 
overcharges will be refundable in case the charges made by the 
company are not sustained on appeal. On the final decision, the 
Commission may direct the manner of the payment of refunds. Such 
appeals shall have precedence in the supreme court over all other 
cases except habeas corpus and state cases already on the docket 
of the court. 

Mr. Patton was of the opinion that the requirements to keep Discussion. 
books showing excess collections is a powerful detriment against 
appeals from the orders of the Commission. It is an expensive task 
to keep such records. Wells-Fargo & Company are keeping them 
under their appeal from the Commission's order of June 11,1 909. 

Section 22 provides that the supreme court may not consider 
any new or additional evidence, "but the court may, when it 
deems it necessary, in the interest of justice, remand to the Com- 
mission any case pending on appeal and require the same to be 
further investigated by the Commission, and reported upon to the 
court, before the appeal is finally decided." Commissioner Hen- 
shaw thinks that this is a good provision, for the reason that the 
court is thus enabled to give to the Commission another opportunity 
in any case in which otherwise it would have to decide against the 
Commission. The Wells-Fargo & Company case is now back 
before the Commission to ascertain just what losses in revenue, if 
any, would be suffered under the Commission's order, if it went into 
effect. 

Whenever the supreme court reverses an order of the Commission In case of 
affecting rates, charges, classifications, etc., it must substitute another reversal. 
rate, charge or classification, so that its function in this respect is 
legislative and not judicial. This provision was taken from the 



144 LOUIS SLOSS & CO. 

Virginia constitution, referred to in the case of Prentiss vs. Atlantic 
Coast Line, 211 U. S. 210, in which case it was held that the 
federal courts should not, as a matter of comity, assume jurisdiction 
to enjoin an order of a state railroad commission fixing rates, until 
the corporation has completely exhausted its remedy by appeal to the 
final rate fixing body in the state, which in Virginia and Oklahoma 
is the supreme court. Notwithstanding an appeal, the Commission 
has the right to make other orders in the same matter based upon 
different circumstances and conditions. This provision is obviously 
to prevent the tying up of the entire rate situation during the 
pendency of court proceedings. 

IV. 

Litigation. 

Many appeals The Oklahoma Commission has had more cases on appeal than 

from orders of any other railroad commission in the country. It has had almost 

UI^Lanoma as manv appeals as all the other commissions, which I investigated, 
Commission. tL 

put together. 

Of the first one hundred cases coming before the Commission on 
complaints of third parties and formally heard before the Commis- 
sion, appeals were taken in thirty-seven cases. The record in these 
cases is as follows: 

1 . Affirmed (or appeals dismissed) 15 

2. Reversed 5 

3. Partly affirmed and partly reversed 2 

4. Remanded for further testimony 2 

5. Pending 13 

of the cases reversed, the Commission had in one case ordered 
a railroad to construct at its own expense a side track so as to 
Character of equalize a disadvantage of location. In two cases, it had ordered 
decisions a railroad to install telegraph service for commercial purposes. In 
appealed from. one casCj j t na j held that a railroad would have to install all 
desired street crossings at its own expense, and in the fifth case, 
involving the installation of telegraph service for bulletining passen- 
ger trains, there was no evidence as to amount of passenger service 
at the station. 



REPORT OF COMMISSIONER THELEN. 145 

As bearing upon the reason for so many appeals, it is well to 
note that the Commission granted the petitioner's prayer in its 
original form or a modified form in eighty-six out of those one 
hundred cases and denied it in only fourteen. 

In cases on the Commission's own initiative, in which proposed 
orders are issued and published and final orders are then either issued 
or not issued after hearing, the railroads appealed in nearly every 
case. Fifteen of these appeals were from orders establishing rates 
on different commodities. The railroads also appealed from orders 
directing reports as to earnings, state and interstate ; requiring accident 
reports; requiring physical connections at junction points; establishing 
demurrage and storage rules; requiring the promulgation of all rules 
and regulations; and requiring all public service corporations to 
maintain an office in the state. 

The most important cases now in litigation involve the rates of : Cases now m 

1. Railroads. /, '"'* a "'° n - 

2. Telegraph companies. 

3. Express companies. 

Railroads. — The matters in litigation comprise the 2 cent Tr»o-cent 
maximum passenger fare law (part of the Constitution) and the passenger fare 
different commodity rates prescribed by the Commission. The 
corporations went to the federal courts and secured injunctions, so 
that these rates have never gone into effect. The case went to the 
United States Supreme Court on the contention of the state that 
under the Prentiss case, 211 U. S. 210, it was the duty of the 
corporations to first exhaust their remedy by appeal to the state 
supreme court. Judge Hook, in the circuit court, differentiated this 
case from the Prentiss case on the ground that the Commission 
had refused to grant a supersedeas bond. The United States 
Supreme Court refused to decide this point, but sent the case back 
to Judge Hook, who decided three or four months ago against the 
state. Commissioner Henshaw, in referring to the decision, said 
that it would be impossible to secure a fair decision from the federal 
courts as long as they insisted on holding that the cost of state service 
was from two or eight times as much as the cost of interstate 
service. 



146 



LOUIS SLOSS & CO. 



Mr. Henshaw said that he hardly thought the Commission would 
further contest the passenger fare case. Section 37 of article IX of 
the constitution, while establishing a 2 cent maximum passenger 
fare, gives the Commission power "to exempt any railroad from the 
operation of this section upon satisfactory proof that it cannot earn 
a just compensation for the services rendered by it to the public, if 
not permitted to charge more than 2 cents per mile for the trans- 
portation of passengers within the state." The Commission has 
exempted from the provisions of the 2 cent law all railroads applying 
for exemption. 

Orders affecting Telegraph Rates. — On December 2, 1908, the Commission 
telegraph issued its order No. 149 prescribing telegraph rates, rules and 
lies. re g U l a ti ons# Commissioner Watson told me that there would have 
been no appeal had it not been for rule 4 providing that the receiv- 
ing clerk must mark on the message the time of filing, and rule 6 
providing that the operator on the other end of the line must mark 
on the message the time when received by him. 

On December 19, 1908, the case was certified to the Supreme 
Court. On December 28, 1909, the mandate of the Supreme 
Court was received, requiring the taking of further evidence to 
show what the company would have lost had the order gone into 
effect. If I am not mistaken, a heavy indemnity bond has been 
filed by the company and it is also keeping an account of excess 
payments. 

Express Rates. — On June 11, 1 909, the Commission issued its 
opinion and order No. 203, prescribing new rates, rules and regu- 
lations for express companies. This is a long and carefully worked 
out order prescribing distance tables for merchandise, general 
special, milk and cream, and other special commodities and also 
classifications, rules, etc., and making a total reduction in rates 
Litigation over of about 20 per cent. All four express companies, Wells-Fargo 
express rates. & Company, United States, American and Pacific, appealed to 
the State Supreme Court, giving bonds in amounts of $200,000, 
$33,000, $35,000 and $4,500 respectively. The Supreme Court 
remanded the case with instructions to ascertain the amount of loss 
which would have been sustained, had the order gone into effect. 



REPORT OF COMMISSIONER THELEN. 147 

— .— .^.^i^— — — — — ^ »^— — ^— ^— ^— ^— ^ 

The express companies have taken a large amount of testimony on 
that point but the state has not as yet had an opportunity to rebut 
the same. 

I was informed that the express companies are trying to com- 
promise the case and that they have made several propositions 
which, while seeming fair, have as a matter of fact made but very 
small reductions, for the reason that the proposed reductions are 
in rates under which but few commodities move. The express 
companies seem to be chafing under the expense necessary to keep 
account of every shipment made, with the name and address of the 
consignor and the amount paid in excess of the Commission's order. 

V. 

Commission's Business. 

Until recently the matters on which the Commission took action 
were divided into (1) complaints; (2) proposed orders, on Com- Methods of 
mission's own initiative; and (3) citations for disobedience of handling business. 
Commission's orders. At present all matters are placed on one 
general docket file. The character of the Commission's activities 
appears from the following compilation: 

Complaints. — Of the first one hundred complaints on which the 
Commission took action, other than to dismiss at the request of 
plaintiff or for lack of prosecution, the nature of the cases was as Character of 
follows: complaints. 

Steam Railroads. 

Passenger trains — stop on signal 8 

Depots — erection or increase in size 18 

Shipping facilities 5 

Sidetracks, spurs, switches 9 

Railroad crossing — with another railroad 1 

Railroad crossing — with highway 2 

Passengers — treatment of, after wreck 1 

Physical connections, railroads 2 

Stations 2 

Bulletining of trains 1 

Stock pens, water in 2 



148 LOUIS SLOSS & CO. 

Agent at depot 1 

Depot to be moved 1 

Additional passenger service 5 

Name of station, change in 1 

Waiting rooms 1 

Stockyards scales 1 

Agent, discourteous treatment by 1 

Union stations I 

Drainage opening 1 

Interurban Railroads. 

Rates, reduction of 1 

Street Railroads. 

Extension of service 1 

Telephone Companies. 

Installation in railroad depot 9 

Rates, reduction of 1 

Rates, discrimination in 1 

Physical connection 6 

Installation in private residence 1 

Telegraph Companies. 

Installation or restoration of service 7 

Cas Companies. 

Gas to be furnished 1 

Express Companies. 

Establishment office and agent 2 

Ice Companies. 

Rates, reduction in 1 

Much time Service, short weight, refusal to sell, etc 4 

auestions of ^ perusal of the foregoing table will show a very great amount 

service, facilities of time devoted by the Commission to the consideration of the 
and equipment, questions of service, facilities and equipment. 



REPORT OF COMMISSIONER THELEN. 149 

Proposed Orders. — These have dealt with matters of fixing Character of 
rates ; accounting rules ; the riling of plans and specifications of all orders of 
depots; accident reports; physical connection of railroads at Commission. 
junction points; the filing of inventories of all telephone and 
telegraph properties; fixing the amount of excess fare to be charged 
to passengers without tickets; demurrage and storage rules; handling 
and moving of freight; filing documents with the Commission; 
requiring all public service corporations to maintain offices in the 
state; the filing of tariffs by express companies, etc. About 
seventy-five proposed orders were made, of which quite a number 
were never issued. 

Citations. — These citations are for violations of the Commission's Cases of 
orders on information of third parties. Hie Commission has power contempt of 
to enforce compliance with its orders by the imposition of fines. 
The usual fine for contempt of the Commission's orders is some- 
where between $100.00 and $500.00. Up to 1911, there were 
one hundred and twenty-three of these cases. The fines are 
imposed on the theory that the railroad is in contempt for failure 
to use due diligence in obeying the orders of the Commission. In 
most other states, the desired results would be secured without the 
necessity of contempt proceedings. 

VI. 

Auditing Department. 

Annual Reports. — This department has prepared forms of 
annual reports for all railroads, street railroads, gas, electric, 
telephone and telegraph companies. The railroad reports contain Commissions 
the information required by the Interstate Commerce Commission report published 
and also the additional information required by the Texas Com- a7mua "P* 
mission. The gas, electric, telephone and telegraph reports have 
been worked out in considerable detail and will be valuable as 
models. 

Monthly Reports. — Following the lead of the Texas Commis- Commission 
sion, the Oklahoma Commission requires each month from each requires monthly 
railway company a full statement of earnings, operating expenses re P or ^ from 
and tonnage moved, going into considerable detail as to segregation Ta 



150 LOUIS SLOSS & CO. 



between state and interstate traffic. The Commission also requires 
a monthly statement of the total tonnage and revenue of all 
commodities moved during the month. 

Organization Reports. — The Commission also required of each 

railroad subject to its jurisdiction a special report containing a copy 

Organization of its charter; its mortgages and other agreements affecting its 

reports must be p roper ty; minutes of stockholders' meetings, etc. These returns 

j? have been bound and are valuable for reference purposes. The 

Oklahoma Street Railway report is particularly complete. 

VII. 

Engineering Department. 

Physical valuation Thi s department is working on the valuation of the properties 
of properties Q f ^ ra ij roac i s anc j Q f ^ e pu \>\[ c utilities of the state. As to 
now being fl ... . . . r . . - 

made none se com P anies 1S the material in final rorm. Questions 

concerning unearned increment, right of way multiple, interest, 
discounts and commissions have not as yet been determined by the 
Commission. 

The department has prepared a complete railroad map of 
Oklahoma and is now preparing detailed maps of each county. 
The Commission paid about $500.00 for 5,000 of these maps, an 
unusually low figure. 

VIII. 

Telephone Department. 

This department is in charge of Mr. Geo. P. Player. The 
telephone companies make an annual report and also monthly 
reports, the latter showing the number of toll and residence telephones 
Investigation of anc J the earnings and expenses for each station. Mr. Player is now 
'* working on material for an investigation by the Commission of 
telephone rates in the state. The telephone companies have returned 
to the Commission, on blanks furnished by it, a statement as to the 
physical values of their plants, by stations. 

There are over six hundred telephone companies in the state, 
most of them being so-called farmers' telephone companies. Section 
5 of article IX of the constitution provides that all telephone and 



REPORT OF COMMISSIONER THELEN. 151 



telegraph lines operated for hire must make physical connections 

with each other's lines under such rules and regulations as the 

Commission may prescribe. This is a matter of very considerable Physical 

importance. The Commission forces in these connections whenever £ onnec 

the point is raised, with the result that it is possible to talk from . , L 
i/-> • • » rr «i en c e t e tcpnone 

the Commission s office with over 50 per cent of the farmers of com p an i es 

the state. required. 

IX. 
Rate Department. 

This department is headed by Mr. C. B. Bee, a very competent 
man. The department has in its files not only all the tariffs Statistical file of 
affecting Oklahoma intrastate business, but also all the interstate rate tariffs 
tariffs in any way affecting the state, both those issued by carriers C0Tn P^ e te. 
doing business in Oklahoma and those issued by other carriers 
concurring in the rates into or through Oklahoma. These latter 
tariffs are furnished to the Commission by the local railroads. The 
Oklahoma Commission believes that its tariffs are as complete as 
those of any state commission in the country. 

The Commission handles all interstate commerce complaints for 
Oklahoma citizens, even filing complaints for them and appearing 
before the Interstate Commerce Commission without any expense to 
the complainant. 

X. 

Corporation Clerk Department. 

This department receives reports from all corporations in the state 
and collects the license taxes. 

XI. 

Municipal Utilities. Municipally 

The Commission has no control over public service plants owned utilities not 
or operated by municipalities. In this respect it differs from the controlled by 
Commissions of Wisconsin, Massachusetts and New York. Commission. 



152 LOUIS SLOSS & CO. 

XII. 

Gas and Electric Companies. 

The Commission's control over these companies has been some- 
what halting, for the reason that there is a question as to whether 
the constitution as now worded confers upon the Commission full 
power of control over this class of corporations. 

XIII. 

Use of Initiative by Corporations. 

Attempts to The "interests" of the state have three times tried by the initiative 

reduce to repeal a section of the constitution forbidding the consolidation 

Commission s f j oca j anc j foreign corporations and substituting a section very 

materially reducing the Commission's power. The Commission 

conducted a campaign each time against the proposition and is of 

the opinion that it has now finally won out. 



Recommendations. 



From the observations which I made on my tour of investigation, 
I respectfully make the following suggestions and recommendations 
concerning the regulation and control of public service corporations 
in this state: 

Service, Equipment and Facilities. 

The appointment by the Railroad Commission of a sufficient 

number of expert inspectors to inspect the physical condition of all 

Appointment of tracks, stations, plants and other facilities and equipment of all the 

expert inspectors, public service corporations of the state ; also to render reports 

constantly as to the quality and sufficiency of the service rendered 

to the public. 

Stock and Bond Law. 

Control of The determination by the Railroad Commission of the 
issuance of amount of stocks, bonds, notes and other evidences of 
securities, indebtedness, that public service corporations may issue 
and the conditions of the issue. 



REPORT OF COMMISSIONER THELEN. 153 



Department of Statistics and Accounts. 

The establishment by the Railroad Commission of a department Collection of 
of statistics and accounts for the purpose of working out a uniform complete 
system of accounts for the different public service corporations of s * ausucal data. 
the state, of analyzing and digesting their annual reports, and 
furnishing to the Commission financial and other statistical data 
whenever needed. 

Public Utilities. 

Adequate control by the Railroad Commission, under the Control of public 
constitution as recently amended, of rates, service, equipment, stocks utilities as to 
and bonds, and accounts of gas, electric, water, power, telephone, u ^I^'j 

telegraph and street railway companies, and other public utilities, f ac ffit: es 
including the power to compel physical connections between telephone 
companies. 

Property Valuation. 

The extension of the power of the Railroad Commission in the Power to ascertain 
matter of ascertaining the value of the property engaged in the physical valuation 
public service from railroads to all other public service corporations 0l 
subject to its jurisdiction. 

Public Safety. 

The adoption of adequate means to secure public safety, par- Control of grade 
ticularly with reference to grade crossings between railroads and a 
highways, or two or more railroads. 

Interstate Commerce Complaints. 

The protection of the people of California in the matter of Represent people 
interstate commerce rates, where any considerable portion of the before interstate 
shippers of the state are affected. The Railroad Commission should ~,° " merc , e 
appear in such cases before the Interstate Commerce Commission. 

Court Proceedings. 

The modification of existing statutes so as more adequately to Prompt settlement 
protect the Railroad Commission from the great delays incident °f legation. 
to court proceedings in many other jurisdictions and for the pro- 
tection of the public in the interim. 



154 LOUIS SLOSS & CO. 



Accidents. 

Immediate The establishment of a system for immediate notice to the 

investigation of Railroad Commission of accidents and for examination into the 

s * same by the Commission's inspectors and recommendations by them 
as to means of prevention. 

Co-operation. 

Formation of Between the State Railroad Commission and the Interstate 

Pacific Coast Commerce Commission and constant correspondence with other State 

l\ai r< tad Commissions. Also the formation of a Pacific Coast Railroad 

Association Commissioners' Association, to consist of the Commissions of Oregon, 

Washington, Nevada and California, for the purpose of frequent 

consultation and concerted action on problems of mutual interest. 

Respectfully submitted, 

Max Thelen, 
Attorney for Railroad Commission of State of California. 

Dated, San Francisco, Cal., October, 1911. 



Assembly Constitutional Amendment 
No. 50. 



A Resolution to Propose to the People of the State 
of California an Amendment to Sections Twenty 
and Twenty-one of Article Twelve of the Con- 
stitution of the State of California Relating 
to Railroads and Other Transportation Companies. 

[Adopted March 24, 1911.] 

The legislature of the State of California at its regular session 
commencing on the second day of January, one thousand nine 
hundred and eleven, two-thirds of all the members elected to each 
of the two houses of said legislature voting in favor thereof hereby 
proposes the following amendment to article 12 of the Constitution 
of the State of California. 

First. Section 20 of Article 12 is hereby amended to read 
as follows: 

Sec. 20. No railroad or other transportation company shall Railroad rates 

raise any rate of charge for the transportation of freight or ..7 . 

. 1 1 • 1 • • t , 1 Without approval 

passengers or any charge connected therewith or incidental thereto, Q ± Commission. 

under any circumstances whatsoever, except upon a showing before 

the railroad commission provided for in this constitution, that such 

increase is justified, and the decision of the said commission upon Decision of 

the showing so made shall not be subject to review by any court Commission not 

except upon the question whether such decision of the commission * 

will result in confiscation of property. 



except 



Second. Section 21 of Article 12 is hereby amended to read R a H roac [ s maXi 
as follows: not discriminate 

Sec. 2 1 . No discrimination in charges or facilities for trans- f ac {l{i{ es ex- 
portation shall be made by any railroad or other transportation between places 
company between places or persons, or in the facilities for the or persons. 



156 



LOUIS SLOSS & CO. 



Long and short 
hauls regulated. 



Exceptions in 

special cases to 

be approved by 

Commission. 



transportation of the same classes of freight or passengers within 
this state. It shall be unlawful for any railroad or other trans- 
portation company to charge or receive any greater compensation 
in the aggregate for the transportation of passengers or of like kind 
of property for a shorter than for a longer distance over the same 
line or route in the same direction, the shorter being included within 
the longer distance, or to charge any greater compensation as a 
through rates than the aggregate of the intermediate rates. 

Provided, ho&ever, that upon application to the railroad com- 
mission provided for in this constitution such company may, in 
special cases, after investigation, be authorized by such commission 
to charge less for longer than for shorter distances for the trans- 
portation of persons or property and the railroad commission may 
from time to time prescribe the extent to which such company may 
be relieved from the prohibition to charge less for the longer than 
for the shorter haul. The railroad commission shall have power to 
authorize the issuance of excursion and commutation tickets at 
special rates. 

Nothing herein contained shall be construed to prevent the rail- 
road commission from ordering and compelling any railroad or other 
transportation company to make reparation to any shipper on 
account of the rates charged to said shipper being excessive or 
discriminatory, provided no discrimination will result from such 
reparation. 



Commission may 

order reparation 

to shippers. 



Assembly Constitutional Amendment 
No. 6. 



A Resolution Proposing to the People of the State 
of California an Amendment to Section Twenty- 
two of Article Twelve of the Constitution of 
the State of California Creating a Railroad 
Commission and Defining Its Powers and Duties. 

[Approved March 24, 1911.] 

The legislature of the State of California, at its regular session, 
commencing on the second day of January, one thousand nine 
hundred and eleven, two-thirds of all the members elected to each 
of the two houses of said legislature voting in favor thereof, hereby 
proposes to the people of the State of California that Section 22 
of Article 12 of the Constitution of the State of California be 
amended so as to read as follows: 

Sec. 22. There is hereby created a railroad commission which Creation of 
shall consist of five members and which shall be known as the Railroad^ 
railroad commission of the State of California. The commission C°™"™swn o) 
shall be appointed by the governor from the state at large ; provided, . , ' • . j 
that the legislature, in its discretion, may divide the state into 
districts for the purpose of such appointments, said districts to be 
as nearly equal in population as practicable; and provided further Districts. 
that the three commissioners in office at the time this section takes 
effect shall serve out the term for which they were elected, and 
that two additional commissioners shall be appointed by the governor 
immediately after the adoption of this section, to hold office during 
the same term. Upon the expiration of said term, the term of 
office of each commissioner thereafter shall be six years, except Term of office 
the commissioners first appointed hereunder after such expiration, s,x P ears - 
one of whom shall be appointed to hold office until January 1, 
1917, two until January 1, 1919, and two until January 1, 1921. 
Whenever a vacancy in the office of commissioner shall occur, the 



158 



LOUIS SLOSS & CO. 



Governor to 
fill vacancies. 



Removal of 
Commissioners. 



Disqualifications. 



Orders effective 

upon approval 

of majority. 



Powers of 

Commission 

to establish 

rates. 



governor shall forthwith appoint a qualified person to fill the same 
for the unexpired term. Commissioners appointed for regular terms 
shall, at the beginning of the term for which they are appointed, 
and those appointed to fill vacancies, shall, immediately upon their 
appointment, enter upon the duties of their offices. The legislature 
shall fix the salaries of the commissioners, but pending such action 
the salaries of the commissioners, their officers and employees shall 
remain as now fixed by law. The legislature shall have the 
power, by a two-thirds vote of all members elected to each house, 
to remove any one or more of said commissioners from office for 
dereliction of duty or corruption or incompetency. All of said com- 
missioners shall be qualified electors of this state, and no person 
in the employ of or holding any official relation to any person, firm 
or corporation, which said person, firm or corporation is subject 
to regulation by said railroad commission and no person owning 
stock or bonds of any such corporation or who is in any manner 
pecuniarily interested therein, shall be appointed to or hold the office 
of railroad commissioner. No vacancy in the commission shall 
impair the right of the remaining commissioners to exercise all the 
powers of the commission. The act of a majority of the commis- 
sioners when in session as a board shall be deemed to be the act 
of the commission; but any investigation, inquiry or hearing which 
the commission has power to undertake or to hold may be under- 
taken or held by or before any commissioner designated for the 
purpose by the commission, and every order made by a commissioner 
so designated, pursuant to such inquiry, investigation or hearing, 
when approved or confirmed by the commission ordered filed in its 
office, shall be deemed to be the order of the commission. 

Said commission shall have the power to establish rates of 
charges for the transportation of passengers and freight by rail- 
roads and other transportation companies, and no railroad or 
other transportation company shall charge or demand or collect or 
receive a greater or less or different compensation for such trans- 
portation of passengers or freight, or for any service in connection 
therewith, between the points, named in any tariff of rates, established 
by said commission than the rates, fares and charges which are 
specified in such tariff. The commission shall have the further 



ASSEMBLY CONSTITUTIONAL AMENDMENT No. 6. 159 

power to examine books, records and papers of all railroad and To examine 

other transportation companies; to hear and determine complaints records. 

against railroad and other transportation companies; to issue 

subpoenas and all necessary process and send for persons and To control 

papers ; and the commission and each of the commissioners shall facilities and 

have the power to administer oaths, take testimony and punish for service - 

contempt in the same manner and to the same extent as courts 

of record ; the commission may prescribe a uniform system of To enforce orders. 

accounts to be kept by all railroad and other transportation 

companies. 

No provision of this constitution shall be construed as a limitation Additional 
upon the authority of the legislature to confer upon the railroad powers. 
commission additional powers of the same kind or different from 
those conferred herein which are not inconsistent with the powers 
conferred upon the railroad commission in this constitution, and the 
authority of the legislature to confer such additional powers is 
expressly declared to be plenary and unlimited by any provision of 
this constitution. 

The provisions of this section shall not be construed to repeal 
in whole or in part any existing law not inconsistent herewith, 
and the "Railroad Commission Act" of this state approved Railroad 
February 10, 1911, shall be construed with reference to this Commission 
constitutional provision and any other constitutional provision 
becoming operative concurrently herewith. And the said act shall 
have the same force and effect as if the same had been passed 
after the adoption of this provision of the constitution and of all 
other provisions adopted concurrently herewith, except that the 
three commissioners referred to in said ac f . shall be held and 
construed to be the five commissioners provided for herein. 



Senate Constitutional Amendment 

No. 47. 



A Resolution Proposing to the People of the State 
of California an Amendment to Section Twenty- 
three of Article Twelve of the Constitution of 
the State of California, to Confer Upon the 
Railroad Commission Power and Jurisdiction to 
Regulate and Control the Business of Furnishing 
Certain Commodities and Performing Certain 
Services to or for the Public. 

[Adopted March 28, 1911.] 

The Legislature of the State of California, at its regular session, 
commencing on the second day of January, one thousand nine 
hundred and eleven, two-thirds of all the members elected to each 
of the two houses of said Legislature voting in favor thereof, hereby 
proposes to the people of the State of California that Section 
23 of Article 12 of the Constitution of the State of California 
be amended so as to read as follows: 

Sec. 23. Every private corporation, and every individual or Public Utilities 

association of individuals, owning, operating, managing, or controlling defined by 

any commercial railroad, interurban railroad, street railroad, canal, c , . , 
... r ' l i l i amendment and 

pipe line, plant, or equipment, or any part or such railroad, canal, +,/ ace J under 

pipe line, plant or equipment within this state, for the transportation control of 

or conveyance of passengers, or express matter, or freight of any Commission. 

kind, including crude oil, or for the transmission of telephone or 

telegraph messages, or for the production, generation, transmission, 

delivery or furnishing of heat, light, water or power or for the 

furnishing of storage or wharfage facilities, either directly or 

indirectly, to or for the public, and every common carrier, is 

hereby declared to be a public utility subject to such control and 

regulation by the railroad commission as may be provided by the 

legislature, and every class of private corporations, individuals, or 



162 



LOUIS SLOSS & CO. 



Powers of 

Commission 

plenary. 



Powers 

respecting public 

utilities vested 

in Board of 

Supervisors to 

cease. 



associations of individuals hereafter declared by the legislature to 
be public utilities shall likewise be subject to such control and 
regulation. 

The railroad commission shall have and exercise such power 
and jurisdiction to supervise and regulate public utilities, in the 
State of California, and to fix the rates to be charged for 
commodities furnished, or services rendered by public utilities as 
shall be conferred upon it by the legislature, and the right of the 
legislature to confer powers upon the railroad commission respecting 
public utilities is hereby declared to be plenary and to be unlim- 
ited by any provision of this constitution. 

From and after the passage by the legislature of laws con- 
ferring powers upon the railroad commission respecting public 
utilities, all powers respecting such public utilities vested in boards 
of supervisors, or municipal councils, or other governing bodies 
of the several counties, cities and counties, cities and towns, in this 
state, or in any commission created by law and existing at the 
time of the passage of such laws, shall cease so far as such powers 
shall conflict with the powers so conferred upon the railroad 
commission; provided, however, that this section shall not affect 
such powers of control over any public utility vested in any city 
and county, or incorporated city or town as, at an election to be 
held pursuant to laws to be passed hereafter by the legislature, a 
majority of the qualified electors voting thereon of such city and 
county, or incorporated city or town, shall vote to retain, and until* 
such election such powers shall continue unimpaired; but if the 
vote so taken shall not favor the continuation of such powers they 
shall thereafter vest in the railroad commission as provided by law; 
and provided, further that where any such city and county or 
incorporated city or town shall have elected to continue any powers 
respecting public utilities, it may, by a vote of a majority of its 
qualified electors voting thereon, thereafter surrender such powers 
to the railroad commission in the manner to be prescribed by the 
legislature; or if such municipal corporation shall have surrendered 
any powers to the railroad commission, it may, by like vote, there- 
after reinvest itself with such power. 

Nothing in this section shall be construed as a limitation upon 
any power conferred upon the railroad commission by any provision 
of this constitution now existing or adopted concurrently herewith. 



Except 



Procedure 

under which 

municipalities 

may retain 

control. 



Public Utilities Election Act. 



An Act to Provide for Submitting to the Qualified 
Electors of Every City and County, or Incor- 
porated City or Town, in This State the Question 
Whether Such City and County, or Incorporated 
City or Town, Shall Retain the Powers of 
Control Vested Therein Respecting All or Any 
Public Utilities, and Providing Further for 
Elections Thereafter to Surrender Such Powers 
in Case the Qualified Electors of Any Such City 
and County, or Incorporated City or Town, Shall 
Have Voted to Retain Such Powers or to Reinvest 
Such City and County, or Incorporated City or 
Town, With Such Powers, in Case the Qualified 
Electors Thereof Have Voted to Surrender 
Such Powers. 

[Approved January 2, 1912.] 

The people of the State of California do enact as follows: 

SECTION I. Any city and county, or incorporated city or Municipalities 
town, may retain its powers of control vested therein respecting may retain, may 
any one or more classes of public utilities and may thereafter surrender or may 
surrender such powers to the Railroad Commission of the State of re } n est . . , 

California, hereinafter called the Railroad Commission, or may con / ro / f fiu J,/ic 
reinvest itself with such powers as it may have surrendered to the utilities. 
Railroad Commission, all as in this act provided. 

Sec. 2. The term "municipal corporation," as used in this act, "Municipal 
shall be construed to mean a city and county, or an incorporated corporation* 
city or town. The term "legislative body," as used in this act, defined. 
shall be construed to mean the board of supervisors, municipal "Legislative 
council, commission or other legislative or governing body of a Body* defined. 
municipal corporation. 



164 LOUIS SLOSS & CO. 

Other terms Sec. 3. The terms "railroad corporation," "street railroad 
defined, corporation," "common carrier," "gas corporation," "electrical 
corporation," "water corporation," "telephone corporation," "tele- 
graph corporation," "wharfinger," "warehouseman" and "public 
utility," as used in this act, shall severally have the same meaning 
as is given to them, respectively, in section 2 of the act known as 
the "Public Utilities Act." 

When and hon> Sec. 4. The question whether any municipal corporation shall 

n °' retain its powers of control respecting one or more classes of public 

ubmitted to the uunt * es ma y be submitted to the qualified electors of such municipal 

people, corporation, as provided in this act, either at a general municipal 
election or at a special election held therein. Such question may 
be so submitted, either in pursuance of an ordinance of intention 
adopted by a vote of three-fifths of all the members of the legislative 
body of such municipal corporation, declaring that the public 
interest requires the submission of, and that it is the intention of 
such legislative body to submit, such question to a vote of the 
qualified electors of such municipal corporation, or in pursuance 
of a petition of qualified electors of such municipal corporation, as 
hereinafter provided. Such ordinance of intention or such petition, 
as the case may be, shall contain the propositions proposed to be 
so submitted, as set forth in section 6 of this act. Such petition 
shall be signed by qualified electors of such municipal corporation, 
Ten per cent of equal in number to ten per centum of such qualified electors, 
qualified-electors computed upon the total number of votes cast in such municipal 

lustsign corporation for all candidates for governor at the last preceding 
general election prior to the filing of such petition at which a 

Form of governor was elected. Such petition may consist of separate papers ; 

petition, provided, that if any paper consists of more than one sheet, it shall 
be securely fastened together at the top. The signatures need not 
all be appended to one sheet or paper. Each such paper shall 
have attached thereto, at the bottom of the last sheet thereof, the 
affidavit of a qualified elector of such municipal corporation, stating 
that all of the signatures on each sheet thereof were made in his 
Filing of presence, and that to the best of his knowledge and belief each 

petition, signature is the genuine signature of the person whose name purports 
to be thereto subscribed. Such petition shall be filed with the 



PUBLIC UTILITIES ELECTIO N ACT. 165 

clerk of the legislative body of such municipal corporation. Within 

ten days from the date of the filing of such petition, said clerk 

shall examine the petition and ascertain from the record of the 

registration of the electors of the city and county, or of the county 

in which such municipal corporation is situated, whether the petition 

is signed by the requisite number of the qualified electors of such 

municipal corporation ; and if requested by said clerk, the said Identification of 

legislative body of said municipal corporation shall authorize him signatures. 

to employ persons specially to assist him in the work of examining 

such petition and shall provide for their compensation. Upon the 

completion of such examination, said clerk shall forthwith attach to 

said petition his certificate, properly dated, showing the result of 

such examination. If from such examination, said clerk shall find 

that said petition is signed by the requisite number of qualified 

electors, he shall certify that the same is sufficient; but if, from Petitions to be 

such examination, he shall find that said petition is not signed by certified. 

such requisite number of qualified electors, he shall certify to the 

number of qualified electors signing such petition and to the number 

of qualified electors required to make such petition sufficient. If by 

the certificate of said clerk the petition is shown to be insufficient, 

it may be amended by filing a supplemental petition within ten Supplementary 

days from the date of such certificate. Said clerk shall, within P e M l0 ^s. 

ten days from the filing of such supplemental petition, make like 

examination of the same and certify to the result of such examination 

as hereinbefore provided. If the certificate of the clerk shall show 

any such petition, or any such petition together with a supplemental 

petition, to be insufficient, it shall be retained by him and kept as 

a public record, without prejudice, however, to the filing of a new New Petitions. 

petition to the same effect. But if, by the certificate of the clerk, 

such petition, or such petition together with a supplemental petition, 

is shown to be sufficient, the clerk shall forthwith present the same 

to the legislative body of such municipal corporation. The 

sufficiency or insufficiency of such petition shall not be subject to 

review by such legislative body. After the election held in 

pursuance of such petition, the sufficiency of such petition in any 

respect shall not be subject to judicial review or be otherwise 

questioned. In any city and county having a board of election 

commissioners and a registrar of voters, the clerk of the legislative 



166 LOUIS SLOSS & CO. 

body thereof shall immediately upon the filing of any petition with 
him, transmit the same to such board of election commissioners, who 
shall forthwith deliver such petition to said registrar of voters, who 
shall perform all the duties herein required to be performed in other 
municipal corporations by the clerk of the legislative body thereof, 
respecting the examination and certification of such petition. Such 
registrar of voters shall, upon making his certificate, forthwith 
return said petition to said clerk, who shall thereupon present such 
petition and the certificate thereto attached to the legislative body 
of such municipal corporation as hereinbefore in this section provided. 
Special elections Sec. 5. Upon the adoption of such ordinance of intention, or 
under the Act. fa e presentation as aforesaid of such petition, as provided in section 
4 of this act, the legislative body of such municipal corporation 
shall, by ordinance, order the holding of a special election for the 
purpose of submitting to the qualified electors of such municipal 
corporation the propositions set forth in such ordinance of intention 
or in such petition, as the case may be, which propositions shall be 
those set forth in section 6 of this act, or such legislative body 
shall, by ordinance, order the submission of such propositions at a 
general municipal election, as hereinafter provided. Such special 
election shall be held not less than twenty days nor more than 
sixty days after the adoption of the ordinance of intention provided 
for in section 4 of this act, or the presentation of such petition to 
said legislative body; provided, that if a general municipal election 
shall occur in said municipal corporation not less than twenty days 
nor more than sixty days after the adoption of said ordinance of 
intention or the presentation of said petition to said legislative 
body, said propositions may be submitted at such general municipal 
election, in the same manner as other propositions are required by 
law to be submitted at general municipal elections in such municipal 
corporation. Every special election held in any municipal cor- 
poration under the provisions of this act, shall be called by the 
legislative body thereof, by ordinance, which shall specify the 
propositions to be submitted at such election and the date thereof, 
and, where provision is not otherwise made by law, shall establish 
the election precincts therefor and designate the polling places 
therein, and the names of the election officers for each such precinct. 



PUBLIC UTILITIES ELECTION ACT. 167 

Such ordinance shall, prior to such election, be published five times Publication of 

in a daily newspaper printed and published in such municipal { ^ rdmance ' 

corporation, or twice in a weekly newspaper printed and published 

therein, if there be no such daily newspaper; provided, that if no 

such daily or weekly newspaper be printed and published in such 

municipal corporation, the clerk of said legislative body shall post 

a copy of said ordinance in three public places in such municipal 

corporation at least ten days prior to such election. The propositions 

submitted under this section at any general municipal election or at 

any special election shall be the same as those set forth in section 6 

of this act. 

Sec. 6. The ballots to be used at any general municipal election Style of ballot 
or at any special election, at which is submitted the question c 
whether a municipal corporation shall retain its powers of control 
respecting public utilities shall have printed thereon, in addition to 
the other matters required by law, the following propositions: 

"Proposition No. 1 . Shall (name of 

municipal corporation) retain its powers of control over railroad 
corporations?" 

"Proposition No. 2. Shall (name of 

municipal corporation) retain its powers of control over street rail- 
road corporations?'* 

"Proposition No. 3. Shall (name of 

municipal corporation) retain its powers of control over common 
carriers other than railroad and street railroad corporations?" 

"Proposition No. 4. Shall (name of 

municipal corporation) retain its powers of control over gas cor- 
porations?" 

"Proposition No. 5. Shall (name of 

municipal corporation) retain its powers of control over electrical 
corporations?" 

"Proposition No. 6. Shall (name of 

municipal corporation) retain its powers of control over telephone 
corporations?" 



168 , LOUIS SLOSS & CO . 

"Proposition No. 7. Shall (name of 

municipal corporation) retain its powers of control over telegraph 
corporations?" 

"Proposition No. 8. Shall (name of 

municipal corporation) retain its powers of control over water 
corporations?" 

"Proposition No. 9. Shall (name of 

municipal corporation) retain its powers of control over wharf- 
ingers?" 

"Proposition No. 1 0. Shall (name of 

municipal corporation) retain its powers of control over ware- 
housemen?" 

Instructions to Opposite each such proposition to be voted upon, and to the 
voters, right thereof, the words "Yes" and "No" shall be printed on 
separate lines, with voting squares. Any voter desiring to vote 
in favor of the retention of the powers of control of such municipal 
corporation respecting any particular class of public utility, shall 
stamp a cross (X) in the voting square after the printed word 
"Yes" opposite the proposition as to such class, and any voter 
desiring to vote against the retention of such powers of such 
municipal corporation respecting any particular class of public 
utility, shall stamp a cross (X) in the voting square after the 
printed word "No" opposite such proposition. 

Canvassing Sec. 7. If the propositions specified in section 6 of this act 
election returns, shall have been submitted at a special election in any municipal 
corporation, then the legislative body or other body or board 
charged with the duty of canvassing the returns and declaring the 
result of elections in such municipal corporation, shall meet at their 
usual place of meeting on the first Monday after such election to 
canvass the returns and declare the result thereof. Immediately upon 
the completion of such canvass, or upon the completion of the 
canvass of the returns of any general municipal election at which 
such propositions shall have been submitted, such legislative body or 
other body or board charged with said duty shall make an order 
declaring the result of the election upon such propositions and shall 



PUBLIC UTILITIES ELECTION ACT. 1 69 

cause the same to be entered upon its minutes, which order shall 
show the total number of votes cast upon each such proposition, 
and the number of votes cast respectively in favor of and against 
each such proposition. If it shall appear from the result of such Result of 
election, as so declared, that a majority of the qualified electors of election to retain. 
such municipal corporation voting on any proposition submitted, as 
provided in section 5 of this act, shall have voted to retain the 
powers of control of such municipal corporation respecting any 
particular class of public utility, such municipal corporation shall 
be deemed to have elected to retain such powers of control respect- 
ing such class of public utility, and such powers shall be exercised 
by such municipal corporation until the same may be surrendered 
as hereinafter provided; and if it shall appear from the result of 
such election, as so declared, that a majority of such qualified 
electors so voting on any such proposition shall have voted not to 
retain such powers respecting any class of public utility, such munic- 
ipal corporation shall be deemed to have elected not to retain 
such powers of control respecting such class of public utility, and 
such power of control shall thereafter vest in and be exercised 
by the railroad commission as provided by law. Immediately upon 
the entry of the order declaring the result of the election as to 
such proposition, the clerk of the legislative body or the registrar 
of voters in any municipal corporation having a board of election 
commissioners and a registrar of voters, shall make copies, in 
duplicate, of such order, and shall attach to each such copy his 
certificate under the seal, if any, of such municipal corporation, or 
of such board of election commissioners, certifying that the same 
is a true and correct copy of such order. Said clerk or registrar One copy of 
of voters, as the case may be, shall forthwith file one of said election returns 
copies in the office of the railroad commission of the State of ™" s/ h f e 



Commission if 
municipality 



California and the other in the office of the secretary of state. 

Immediately upon the filing of such certified copy of such order </ e /ega/es control. 

in the office of the railroad commission, the powers of control 

theretofore vested in such municipal corporation over any class 

or classes of public utilities which a majority of the qualified 

electors of such municipal corporation voting thereof shall have 

voted not to retain, as shown by such order shall thereupon vest 

in and be exercised by the railroad commission, until such municipal 



170 LOUIS SLOSS & CO. 

corporation shall reinvest itself with such powers of control as 
hereinafter provided. 

Procedure when Sec. 8. Any municipal corporation which shall have voted to 
municipality has re t a j n t ne powers of control vested therein respecting any class or 

i u Li- classes of public utilities, or which may have reinvested itself with 

control public * ■ - , , , e , . 

utilities. sucn P ower » as hereinafter provided, may thereafter surrender its 

powers of control as to such class or classes of public utilities at a 

general municipal election or a special election therein, called 

for that purpose. The ballots to be used at such election shall 

have printed thereon, in addition to the other matters required by 

law, separate propositions as to each of the classes of public utilities 

as to which such municipal corporation may theretofore have voted 

to retain its powers of control or with which it may have reinvested 

itself. As to each of such classes of public utilities, and in addition 

to the other matters required by law to be printed thereon, a 

proposition shall be printed on the ballot to be used at such 

Form of ballot election in substantially the following form: "Shall 

election to ( name f municipal corporation) surrender its powers of control 

' over (here insert class of public utility) to the 

railroad commission?" Opposite each such proposition to be voted 

upon, and to the right thereof, the words "Yes'* and "No" shall 

be printed on separate lines, with voting squares. Any elector 

desiring to vote to surrender the powers of control of such municipal 

corporation over any class of public utility specified on the ballot, 

shall stamp a cross (X) in the voting square opposite the printed 

word "Yes," after the proposition as to such class; and any 

elector desiring to vote not to surrender the powers of control of 

such municipal corporation over such class of public utility, shall 

stamp a cross (X) in the voting square opposite the printed word 

"No" after the proposition as to such class. The provisions of 

sections 4, 5 and 7 of this act, in so far as applicable, shall govern 

elections called, conducted and held under the provisions of this 

section and to general municipal elections at which such propositions 

Canvassing shall be submitted. If it shall appear from the result of such 

resu " s °f election declared as provided in section 7 of this act, that a majority 

, of the qualified electors of such municipal corporation voting on 
to surrender. * . . , . , ....... , „ , 

any proposition submitted as provided in this section, shall have 



PUBLIC UTILITIES ELECTION ACT. 17J 

voted to surrender the powers of control of such municipal corpora- 
tion respecting any particular class of public utility, such municipal 
corporation shall be deemed to have surrendered its powers of 
control as to such class of public utility to the railroad commission, 
and such powers shall thereafter vest in and be exercised by the 
railroad commission, as provided by law, upon the filing, in the 
office of the railroad commission, of a certified copy of the order 
declaring the result of such election until such municipal corporation 
shall reinvest itself with such powers as hereinafter provided; and 
if it shall appear from the result of such election, as declared, that 
a majority of such qualified electors voting on any such proposition 
shall have voted not to surrender such powers of control respecting 
any particular class of public utility, such powers of control shall Question of 

continue in such municipal corporation; provided, however, that such c ? °K ui } lues 

, , i r i lii 1 • • i ™ a P be submitted 

powers or control may thereafter be surrendered by such municipal ^ vo i ers a { an \, 

corporation at any subsequent election at which the question of such election. 

surrender may again be submitted under the provisions of this act. 

Sec. 9. Any municipal corporation that shall have surrendered A municipality 

to the railroad commission powers of control respecting any class ?•? . s ' 

r ... ... , , . • if -i i with control of 

or public utility may thereafter reinvest itself with such powers u i[\{i{ es 

by a vote of the qualified electors thereof taken at a general 

municipal election or at a special election. The ballots to be 

used at such election shall have printed thereon, in addition to the 

other matters required by law, separate propositions as to each 

class of public utility designated in the petition for such election or 

in the ordinance of intention. As to each such class of public utility, 

a proposition shall be printed on the ballot in substantially the 

following form: "Shall (name of municipal Form of ballot 

corporation) reinvest itself with powers of control over ] 

(class of public utility) ?" Opposite each such proposition to be 

voted upon and to the right thereof, the words "Yes" and "No" 

shall be printed on separate lines, with voting squares. Any elector 

desiring to vote to reinvest such municipal corporation with powers 

of control respecting any class of public utility designated on the 

ballot shall stamp a cross (X) in the voting square after the printed 

word "Yes" opposite the proposition as to such class, and any 

elector desiring to vote not to reinvest such municipal corporation 

with powers respecting such class of public utility shall stamp a 



172 LOUIS SLOSS & CO. 

cross (X) in the voting square after the printed word "No** 
opposite such proposition. The provisions of sections 4, 5 and 7 
of this act, in so far as applicable, shall apply to elections called, 
conducted and held under the provisions of this section and to 
general municipal elections at which such propositions shall be 
Canvassing of submitted. If it shall appear from the result of such election, 
election declared as provided in said section 7, that a majority of the 
to reinvest qualified electors of such municipal corporation voting on any 
proposition submitted as provided in this section shall have voted 
to reinvest such municipal corporation with powers of control 
respecting any particular class of public utility, such municipal 
corporation shall be deemed to have reinvested itself with such 
powers, and upon the filing in the office of the railroad commission 
of a certified copy of the order declaring the result of such election, 
the powers of control with which such municipal corporation shall 
have voted to reinvest itself, as shown by such order, shall cease 
to be exercised by the railroad commission, and shall vest in and 
be exercised by such municipal corporation; and if it shall appear 
from the result of such election, as declared, that a majority of 
the qualified electors of such municipal corporation voting on any 
such proposition, as provided in this section, shall have voted not 
to reinvest such municipal corporation with powers of control 
respecting any particular class of public utility, sucri powers 
of control shall continue in and be exercised by the railroad com- 
mission; provided, that such municipal corporation may thereafter 
reinvest itself with such powers of control at any subsequent election 
at which such question may be again so submitted under the 
provisions of this act. 

Elections under Sec. 1 0. The holding of a special election or elections, or 
^ c '- the submission of propositions at any general municipal election, 
under any of the provisions of this act, shall not be construed to 
preclude the holding of a subsequent special election or elections or 
the subsequent submission of propositions at a general municipal 
election or elections, on the question of the retention, surrender or 
reinvestment by a municipal corporation of its powers of control 
respecting any class or classes of public utilities, as in this act 
Limitations, provided; provided, that not more than one such special election 
shall be held within any period of twelve months. 



PUBLIC UTILITIES ELECTION ACT. 173 

Sec. 1 I . Except as otherwise in this act provided, the holding Latvs governing 
and conducting of elections under the provisions of this act, the form special municipal 
of the ballots used, the opening and closing of the polls, the canvass e [! on ? 7 
of the returns and the declaring of the result shall conform, as a ™ 
nearly as may be, to such laws as shall now or hereafter be 
applicable to special municipal elections held in the municipal 
corporation affected. 



Public Utilities Act. 



Chapter Fourteen. 



An Act to Provide for the Organization of the Rail- 
road Commission, to Define Its Powers and Duties 
and the Rights, Remedies, Powers and Duties of 
Public Utilities, Their Officers, Define Its Powers 
and Duties and the Rights, Remedies, of Patrons 
of Public Utilities, and to Provide Penalties for 
Offenses by Public Utilities, Their Officers, 
Agents and Employees and by Other Persons and 
Corporations, Creating the "Railroad Commission 
Fund" and Appropriating the Moneys Therein to 
Carry Out the Provisions of This Act, and Repeal- 
ing the Railroad Commission Act, Approved Feb- 
ruary 10, 1911, and also Repealing an Act Entitled 
"An Act to Amend the Railroad Commission Act by 
Amending Section Fifteen Thereof Relating to 
Powers and Duties of the Railroad Commission of 
the State of California, and to Amend Section 
Thirty-seven Thereof Relating to Free and 
Reduced-Rate Transportation for Freight and 
Passengers," Approved April 6, 1911, and All Acts 
and Parts of Acts Inconsistent with the Provisions 
of This Act. 

[Approved December 23, 1911.] 
The people of the State of California do enact as follows: 

ARTICLE I. 

RAILROAD COMMISSION: GENERAL PROVISIONS. 

Short Title. 

Section 1 . This act shall be known as the "Public Utilities Name of act. 

Act" and shall apply to the public utilities and public services 

herein described and to the commission herein referred to. 



176 LOUIS SLOSS & CO. 



Definitions. 

Definition of Sec. 2. (a) The term "commission," when used in this act, 
Commission. mea ns the Railroad Commission of the State of California. 

Commissioner. (b) The term "commissioner,'* when used in this act, means 
one of the members of the commission. 

Corporation. (c) The term "corporation," when used in this act, includes 
a corporation, a company, an association and a joint-stock association. 

Person. (<0 Th e term "person," when used in this act, includes an 
individual, a firm and a copartnership. 

Transportation ( e ) The term "transportation of persons," when used in this 
of persons, act, includes every service in connection with or incidental to the 
safety, comfort or convenience of the person transported and the 
receipt, carriage and delivery of such person and his baggage. 

Transportation (/) Th e term "transportation of property," when used in this 
oj property. act ^ mc J uc | e8 every service in connection with or incidental to the 
transportation of property, including in particular its receipt, delivery, 
elevation, transfer, switching, carriage, ventilation, refrigeration, icing, 
dunnage, storage and handling, and the transmission of credit by 
express corporations. 

Street railroad. (g) The term "street railroad," when used in this act, includes 
every railway, and each and every branch or extension thereof, by 
whatsoever power operated, being mainly upon, along, above or 
below any street, avenue, road, highway, bridge or public place 
within any city and county, or city or town, together with all real 
estate, fixtures and personal property of every kind used in con- 
nection therewith, owned, controlled, operated or managed for 
public use in the transportation of persons or property; but the term 
"street railroad," when used in this act, shall not include a railway 
constituting or used as a part of a commercial or interurban railway. 

Street railroad (h) The term "street railroad corporation," when used in this 
Corporation. ac t t includes every corporation or person, their lessees, trustees, 
receivers or trustees appointed by any court whatsoever, owning, 
controlling, operating or managing any street railroad for compen- 
sation within this state. 



PUBLIC UTILITIES ACT 177 

(0 The term "railroad," when used in this act, includes every Railroad. 
commercial, interurban and other railway other than a street 
railroad, and each and every branch or extension thereof, by 
whatsoever power operated, together with all tracks, bridges, 
trestles, rights of way, subways, tunnels, stations, depots, union 
depots, ferries, yards, grounds, terminals, terminal facilities, struc- 
tures and equipment, and all other real estate, fixtures and personal 
property of every kind used in connection therewith, owned, con- 
trolled, operated or managed for public use in the transportation 
of persons or property. 

(;') The term "railroad corporation," when used in this act, Railroad 
includes every corporation or person, their lessees, trustees, receivers corporation. 
or trustees appointed by any court whatsoever, owning, controlling, 
operating or managing any railroad for compensation within this 
state. 

(£) The term "express corporation," when used in this act, Express 
includes every corporation or person, their lessees, trustees, receivers corf, 
or trustees appointed by any court whatsoever, engaged in or 
transacting the business of transporting any freight, merchandise 
or other property for compensation on the line of any common 
carrier or stage or auto stage line within this state. 

(0 The term "common carrier," when used in this act, includes Common carrier. 
every railroad corporation; street railroad corporation; express 
corporation; dispatch, sleeping car, dining car, drawing room car, 
freight, freight-line, refrigerator, oil, stock, fruit, car loaning, car 
renting, car loading and every other car corporation or person, their 
lessees, trustees, receivers or trustees appointed by any court what- 
soever, operating for compensation within this state; and every 
corporation or person, their lessees, trustees, receivers or trustees 
appointed by any court whatsoever, owning, controlling, operating 
or managing any vessel regularly engaged in the transportation of 
persons or property for compensation upon the waters of this state 
or upon the high seas, over regular routes between points within 
this state. 

(m) The term "pipe line," when used in this act, includes all p{p e Yme. 
real estate, fixtures and personal property, owned, controlled, 



1 78 LOUIS SLOSS & CO. 

operated or managed in connection with or to facilitate the trans- 
mission, storage, distribution or delivery of crude oil or other fluid 
substances except water through pipe lines. 

Pipe line (n) The term "pipe line corporation," when used in this act, 

corporation, includes every corporation or person, their lessees, trustees, receivers 

or trustees appointed by any court whatsoever, owning, controlling, 

operating or managing any pipe line for compensation within this 

state. 

Gas plant. (°) The term "g as plant," when used in this act, includes all 
real estate, fixtures and personal property, owned, controlled, oper- 
ated or managed in connection with or to facilitate the production, 
generation, transmission, delivery or furnishing of gas (natural or 
manufactured) for light, heat or power. 

Gas corporation. (p) The term "gas corporation," when used in this act, 
includes every corporation or person, their lessees, trustees, receivers 
or trustees appointed by any court whatsoever, owning, controlling, 
operating or managing any gas plant for compensation within this 
state, except where gas is made or produced on and distributed 
by the maker or producer through private property alone solely for 
his own use or the use of his tenants and not for sale to others. 

Electric plant. (q) The term "electric plant," when used in this act, includes 
all real estate, fixtures and personal property owned, controlled, 
operated or managed in connection with or to facilitate the pro- 
duction, generation, transmission, delivery or furnishing of electricity 
for light, heat or power, and all conduits, ducts or other devices, 
materials, apparatus or property for containing, holding or carrying 
conductors used or to be used for the transmission of electricity 
for light, heat or power. 

Electrical (r) The term "electrical corporation," when used in this act, 
corporation, includes every corporation or person, their lessees, trustees, receivers 
or trustees appointed by any court whatsoever, owning, controlling, 
operating or managing any electric plant for compensation within 
this state, except where electricity is generated on or distributed by 
the producer through private property alone solely for his own use 
or the use of his tenants and not for sale to others. 



PUBLIC UTILITIES ACT )J9 

(s) The term "telephone line," when used in this act, includes Telephone line. 
all conduits, ducts, poles, wires, cables, instruments and appliances, 
and all other real estate, fixtures and personal property owned, 
controlled, operated or managed in connection with or to facilitate 
communication by telephone, whether such communication is had 
with or without the use of transmission wires. 

(0 The term "telephone corporation," when used in this act, Telephone 
includes every corporation or person, their lessees, trustees, receivers corporation. 
or trustees appointed by any court whatsoever, owning, controlling, 
operating or managing any telephone line for compensation within 
this state. 

(u) The term "telegraph line," when used in this act, includes Telegraph line. 
all conduits, ducts, poles, wires, cables, instruments and appliances, 
and all other real estate, fixtures and personal property owned, 
controlled, operated or managed in connection with or to facilitate 
communication by telegraph, whether such communication is had 
with or without the use of transmission wires. 

(v) Hie term "telegraph corporation," when used in this act, Telegraph 
includes every corporation or person, their lessees, trustees, receivers ( 
or trustees appointed by any court whatsoever, owning, controlling, 
operating or managing any telegraph line for compensation within 
this state. 

(n>) The term "water system," when used in this act, includes Water system. 
all reservoirs, tunnels, shafts, dams, dikes, head-gates, pipes, flumes, 
canals, structures and appliances, and all other real estate, fixtures 
and personal property, owned, controlled, operated or managed in 
connection with or to facilitate the diversion, development, storage, 
supply, distribution, sale, furnishing, carriage, apportionment or 
measurement of water for power, irrigation, reclamation or manu- 
facturing, or for municipal, domestic or other beneficial use. 

(x) The term "water corporation," when used in this act, Water 
includes every corporation or person, their lessees, trustees, receivers corporation. 
or trustees appointed by any court whatsoever, owning, controlling, 
operating or managing any water system for compensation within 
this state. 



180 LOUIS SLOSS&CO. 

(p) The term "vessel," when used in this act, includes every 
species of water craft, by whatsoever power operated, which is 
owned, controlled, operated or managed for public use in the 
transportation of persons or property. 

(z) The term "wharfinger," when used in this act, includes 
every corporation or person, their lessees, trustees, receivers or 
trustees, appointed by any court whatsoever, owning, controlling, 
operating or managing any dock, wharf or structure used by vessels 
in connection with or to facilitate the receipt or discharge of freight 
or passengers for compensation within this state. 

Warehouseman (aa) The term "warehouseman," when used in this act, 
includes every corporation or person, their lessees, trustees, receivers 
or trustees appointed by any court whatsoever, owning, controlling, 
operating or managing any building or structure in which property 
is regularly stored for compensation within this state, in connection 
with or to facilitate the transportation of property by a common 
carrier or vessel, or the loading or unloading of the same, other 
than a dock, wharf or structure, owned, operated, controlled or 
managed by a wharfinger. 

(bb) The term "public utility," when used in this act, includes 
every common carrier, pipe line corporation, gas corporation, elec-* 
trical corporation, telephone corporation, telegraph corporation, water 
corporation, wharfinger and warehouseman, as those terms are 
defined in this section, and each thereof is hereby declared to be a 
public utility and to be subject to the jurisdiction, control and regu- 
lation of the commission and to the provisions of this act. 

Railroad Commission: Appointment: Term: Vacancies: 

Removal. 

Railroad Sec. 3. (a) The railroad commission shall consist of five 
Commission: members, who shall be appointed by the governor from the state 
at large; provided, that the three commissioners in office on the 
tenth day of October, nineteen hundred and eleven, shall serve out 
the term for which they were elected, and that two additional 
commissioners shall be appointed by the governor to hold office 
during the same term. Upon the expiration of said term, the term 



PUBLIC UTILITIES ACT 181 

of office of each commissioner thereafter shall be six years, excepting 
that of the commissioners first appointed after the expiration of said 
term one shall be appointed to hold office until the first day of 
January, nineteen hundred and seventeen, two until the first day of 
January, nineteen hundred and nineteen, and two until the first day 
of January, nineteen hundred and twenty-one. The commissioners 
shall elect one of their number president of the commission. 

(b) Whenever a vacancy in the office of commissioner shall Vacancies: 
occur, the governor shall forthwith appoint a qualified person to fill rc 
the same for the unexpired term. The legislature, by a two-thirds 
vote of all members elected to each house, may remove any one 
or more of said commissioners from office for dereliction of duty or 
corruption or incompetency. 

Attorney. 

Sec. 4. The commission shall have power to appoint as attorney Attorney. 
to the commission an attorney at law of this state, who shall hold 
office during the pleasure of the commission. It shall be the right 
and the duty of the attorney to represent and appear for the 
people of the State of California and the commission in all actions 
and proceedings involving any question under this act or under 
any order or act of the commission, and, if directed to do so by 
the commission, to intervene, if possible, in any action or proceeding 
in which any such question is involved; to commence, prosecute and 
expedite the final determination of all actions and proceedings 
directed or authorized by the commission; to advise the commission 
and each commissioner, when so requested, in regard to all matters 
in connection with the powers and duties of the commission and the 
members thereof; and generally to perform all duties and services 
as attorney to the commission which the commission may require 
of him. 

Secretary: Assistant Secretary. 

Sec. 5. The commission shall appoint a secretary, who shall Secretary. 
hold office during its pleasure. It shall be the duty of the secretary 
to keep a full and true record of all proceedings of the commis- 
sion, to issue all necessary process, writs, warrants and notices, and 



182 LOUIS SLOSS & CO. 

Assistant to perform such other duties as the commission may prescribe. The 

Secretary, commission may appoint an assistant secretary, who shall have all 

the powers conferred by law upon peace officers to carry weapons, 

make arrests and serve warrants and other process in any county 

or city and county of this state. 

Additional Officers and Employees. 

Other employees Sec. 6. The commission shall have power to employ, during 
to be appointed fa pleasure, such officers, experts, engineers, statisticians, account- 
ants, inspectors, clerks and employees as it may deem necessary to 
carry out the provisions of this act or to perform the duties and 
exercise the powers conferred by law upon the commission. 

Oath of Office: Eligibility of Commissioners and 
Employees. 

Sec. 7. Each commissioner and each person appointed to a 

civil executive office by the commission shall, before entering upon 

the duties of his office, take and subscribe the constitutional oath of 

office. Each commissioner shall be a qualified elector of this state, 

and no person in the employ of or holding any official relation 

to any corporation or person, which said corporation or person is 

subject in whole or in part to regulation by the commission, and 

no person owning stocks or bonds of any such corporation or who 

Commissioners is in any manner pecuniarily interested therein shall be appointed 

5 to or hold the office of commissioner or be appointed or employed 

i » by the commission; provided, that if any such person shall become 

stocks or bonds / f i , i , . ., . , 

the owner or such stocks or bonds or become pecuniarily interested 

in such corporation otherwise than voluntarily, he shall within a 

reasonable time divest himself of such ownership or interest; failing 

to do so, his office or employment shall become vacant. 

Office of Commission: Meetings: Official Seal: 
Supplies and Equipment. 

Office of Sec. 8. (a) The office of the commission shall be in the 
Commission in city and county of San Francisco. The office shall always be 
San Francisco. opent l ega l holidays and non-judicial days excepted. The com- 



PUBLIC UTILITIES ACT 183 



mission shall hold its sessions at least once in each calendar month Sessions 

in said city and county of San Francisco, and may also meet at monthly. 

such other times and in such other places as may be expedient and 

necessary for the proper performance of its duties. For the purpose Meetings 

of holding sessions in places other than the city and county of 

San Francisco, the commission shall have power to rent quarters 

or offices, and the expense thereof and in connection therewith shall 

be paid in the same manner as other expenses authorized by this 

-m • r i • • i ii i iv to public. 

act. 1 he sessions or the commission shall be public. 

(b) The commission shall have a seal, bearing the following 
inscription: "Railroad Commission State of California." The 

seal shall be affixed to all writs and authentications of copies of Courts must 
records and to such other instruments as the commission shall direct. * a ^ e 1 UC 
All courts shall take judicial notice of said seal. 

(c) The commission is authorized to procure all necessary Equipment. 
books, maps, charts, stationery, instruments, office furniture, 
apparatus and appliances, and the same shall be paid for in the 

same manner as other expenses authorized by this act. 

Quorum. 

Sec. 9. A majority of the commissioners shall constitute a Majority 
quorum for the transaction of any business, for the performance Commissioners 
of any duty or for the exercise of any power of the commission. a ^ uc 
No vacancy in the commission shall impair the right of the remain- 
ing commissioners to exercise all the powers of the commission. 
The act of a majority of the commissioners when in session as a 
board shall be deemed to be the act of the commission: but any 
investigation, inquiry or hearing which the commission has power p ^ ers f 
to undertake or to hold may be undertaken or held by or before single 
any commissioner designated for the purpose by the commission, commissioner. 
and every finding, order or decision made by a commissioner so 
designated, pursuant to such investigation, inquiry or hearing, when 
approved and confirmed by the commission and ordered filed in its 
office, shall be and be deemed to be the finding, order or decision 
of the commission. 



184 LOUIS SLOSS & CO. 



Salaries and Expenses. 

Salary of Sec. 10. (a) The annual salary of each commissioner shall 
ssioners. he six thousand (6,000) dollars. All officers, experts, engineers, 
statisticians, accountants, inspectors, clerks and employees of the 
Compensation commission shall receive such compensation as may be fixed by 
of employees, the commission. Hie commissioners, attorney, secretary, rate expert 
and assistant secretary shall be civil executive officers and their 
salaries as fixed by law or the commission shall be paid in the 
How paid, same manner as are the salaries of other state officers. The salary 
or compensation of every other person holding office or employment 
under the commission shall be paid monthly from the funds appro- 
priated for the use of the commission, after being approved by the 
commission, upon claims therefor to be audited by the board of 
control. 

Expenses. (b) All expenses incurred by the commission pursuant to the 
provisions of this act, including the actual and necessary traveling 
and other expenses and disbursements of the commissioners, their 
officers and employees, incurred while on business of the commission, 
How paid, shall be paid from the funds appropriated for the use of the 
commission, after being approved by the commission, upon claims 
therefor to be audited by the board of control. 

Transportation for Commissioners, Officers and 

Employees. 

Sec. 1 1 . The commissioners and the officers and employees 
n of the commission, shall, when in the performance of their official 
duties, have the right to pass, free of charge, on all railroads, cars, 
vessels and other vehicles of every common carrier, as said term is 
defined in this act, subject in whole or in part to control or regu- 
lation by the commission, between points within this state, and such 
persons shall not be denied the right to travel upon any railroad, 
car, vessel or other vehicle of such common carrier, whether such 
railroad, car, vessel or other vehicle be used for the transportation 
of passengers or freight, and regardless of its class. 



PUBLIC UTILITIES ACT 185 



Annual Report. 

Sec. 12. The commission shall make and submit to the Complete 
governor on or before the first day of December of each year reports to be 
subsequent to the year nineteen hundred and twelve, a report con- n 
taining a full and complete account of its transactions and 
proceedings for the preceding fiscal year, together with such other 
facts, suggestions, and recommendations as it may deem of value to 
the people of the state. 

ARTICLE II. 

DUTIES OF PUBLIC UTILITIES. 

Charges: Service and Facilities: Rules and 
Regulations. 

Sec. 1 3. (a) All charges made, demanded or received by Public utility 
any public utility, or by any two or more public utilities, for any ^ hc 
product or commodity furnished or to be furnished or any service 
rendered or to be rendered shall be just and reasonable. Every 
unjust or unreasonable charge made, demanded or received for such Unreasonable 
product or commodity or service is hereby prohibited and declared charges 
unlawful. prohibited. 

(b) Every public utility shall furnish, provide and maintain Service and 
such service, instrumentalities, equipment and facilities as shall pro- facilities must 
mote the safety, health, comfort and convenience of its patrons, 

employees and the public, and as shall be in all respects adequate, 
efficient, just and reasonable. 

(c) All rules and regulations made by a public utility affecting Rules must 
or pertaining to its charges or service to the public shall be just : 

and reasonable. 

Tariff Schedules: Publication. 

Sec. 14. (a) Every common carrier shall file with the com- Common 
mission and shall print and keep open to the public inspection carriers must 
schedules showing the rates, fares, charges and classifications for publish fa 
the transportation between termini within this state of persons and 
property from each point upon its route to all other points thereon; 
and from each point upon its route to all points upon every other 



186 LOUIS SLOSS & CO. 

route leased, operated or controlled by it; and from each point on 
its route or upon any route leased, operated or controlled by it to 
all points upon the route of any other common carrier, whenever a 
through route and a joint rate shall have been established or 
ordered between any two such points. If no joint rate over a 
through route has been established, the schedules of the several 
carriers in such through route shall show the separately established 
rates, fares, charges and classifications applicable to the through 

Information transportation. The schedules printed as aforesaid shall plainly 
which must s t a t e t ne pl ace s between which property and persons will be carried, 
and shall also contain the classification of passengers or property 
in force, and shall also state separately all terminal charges, storage 
charges, icing charges and all other charges which the commission 
may require to be stated, all privileges or facilities granted or 
allowed, and all rules or regulations which may in any wise change, 
affect or determine any part, or the aggregate of, such rates, fares, 
charges and classifications, or the value of the service rendered to the 
passenger, shipper or consignee. Subject to such rules and regula- 
Schedules nons as tne commission may prescribe, such schedules shall be plainly 

must be kept printed in large type, and a copy thereof shall be kept by every such 
open to public, carrier readily accessible to and for inspection by the public in every 

Where kept, station or office of such carrier where passengers or property are 
respectively received for transportation, when such station or office 
is in charge of an agent, and in every station or office of such carrier 
where passenger tickets or tickets for sleeping, parlor car or other 
train accommodations are sold or bills of lading or waybills or 
receipts for property are issued. Any or all of such schedules kept 
as aforesaid shall be immediately produced by such carrier for inspec- 
tion upon the demand of any person. A notice printed in bold type 
and stating that such schedules are on file with the agent and open 
to inspection by any person, and that the agent will assist any person 
to determine from such schedules any rates, fares, rules or regulations 
in force, shall be kept posted by the carrier in two public and 
Form of conspicuous places in every such station or office. The form of 
schedule to be every such schedule shall be prescribed by the commission and shall 

prescribed by conform in the case of common carriers subject to the act of congress 

mission. entitled 44 A n act t0 regulate commerce," approved February fourth, 

eighteen hundred and eighty-seven, and the acts amendatory thereof 



PUBLIC UTILITIES ACT T6£ 

and supplementary thereto, as nearly as may be to the form of 
schedules prescribed by the interstate commerce commission under 
said act 

(b) Under such rules and regulations as the commission may Other public 
prescribe, every public utility other than a common carrier shall file (y. c ? mu 
with the commission within such time and in such form as the ^ , t 
commission may designate, and shall print and keep open to public m / e5 
inspection schedules showing all rates, tolls, rentals, charges and regulations, etc. 
classifications collected or enforced, or to be collected or enforced, 

together with all rules, regulations, contracts, privileges and facilities 
which in any manner affect or relate to rates, tolls, rentals, classifica- 
tions, or service. The rates, tolls, rentals and charges shown on such 
schedules when filed by a public utility as to which the commission 
by this act acquires the power to fix any rates, tolls, rentals or 
charges, shall not, within any portion of the territory as to which the 
commission acquires as to such public utility such power, exceed the 
rates, tolls, rentals or charges in effect on the tenth day of October, Charges must not 
nineteen hundred and eleven ; the rates, tolls, rentals and charges exceed those in 
shown on such schedules, when filed by any public utility as to e ^ { 
any territory as to which the commission does not by this act acquire 
as to such public utility such power, shall not exceed the rates, tolls, 
rentals and charges in effect at the time the commission acquires as to 
such territory and as to such public utility the power to fix rates, 
tolls, rentals or charges. Nothing in this section contained shall Commission may 
prevent the commission from approving or fixing rates, tolls, rentals ^ x c 
or charges, from time to time, in excess of or less than those shown 
by said schedules. 

(c) The commission shall have power, from time to time, in its Commission may 
discretion, to determine and prescribe by order such changes in the cnan 8 e 

form of the schedules referred to in this section as it may find 
expedient, and to modify the requirements of any of its orders, rules 
or regulations in respect to any matter in this section referred to. 

Changes in Schedules: Notice Required. Public utility 

Sec. 15. Unless the commission otherwise orders, no change » J m'th t 
shall be made by any public utility in any rate, fare, toll, rental, thirty days' 
charge or classification, or in any rule, regulation or contract relating notice. 



188 LOUIS SLOSS & CO. 

to or affecting any rate, fare, toll, rental, charge, classification or 
service, or in any privilege or facility, except after thirty days' 
notice to the commission and to the public as herein provided. Such 
notice shall be given by filing with the commission and keeping open 
for public inspection new schedules stating plainly the change or 
changes to be made in the schedule or schedules then in force, and 
the time when the change or changes will go into effect. The 
commission, for good cause shown, may allow changes without 
requiring the thirty days' notice herein provided for, by an order 
specifying the changes so to be made and the time when they shall 
take effect, and the manner in which they shall be filed and pub- 
lished. When any change is proposed in any rate, fare, toll, rental, 
charge or classification, or in any form of contract or agreement or 
in any rule, regulation or contract relating to or affecting any rate, 
fare, toll, rental, charge, classification or service, or in any privilege 
or facility, attention shall be directed to such change on the schedule 
filed with the commission, by some character to be designated by the 
commission, immediately preceding or following the item. 

Concurrence in Joint Tariffs. 

Sec. 1 6. The names of the several public utilities which are 
concurrences, parties to any joint tariff, rate, fare, toll, contract, classification or 
charge shall be specified in the schedule or schedules showing the 
same. Unless otherwise ordered by the commission, a schedule 
showing such joint tariff, rate, fare, toll, contract, classification or 
charge need be filed with the commission by only one of the parties 
to it; provided ', that there is also filed with the commission in such 
form as the commission may require a concurrence in such joint 
tariff, rate, fare, toll, contract, classification or charge by each of the 
other parties thereto. 

Rates and Fares as Published to Be Charged: 
Exceptions. 

No common Sec. 1 7. (a) 1 . No common carrier subject to the provisions 

carrier may c f this act shall engage or participate in the transportation of persons 

1 or property, between points within this state, until its schedules of 

rates, fares, charges and classifications shall have been filed and 
until schedules , ' ' . ., , . . , ,. 

are filed, published in accordance with the provisions or this act. 



PUBLIC UTILITIES ACT 189 



2. No common carrier shall charge, demand, collect or receive a Compensation for 

greater or less or different compensation for the transportation of 

persons or property, or for any service in connection therewith, than , ,. L , 

. ,11 rii i • from published 

the rates, tares and charges applicable to such transportation as ra j es 

specified in its schedules filed and in effect at the time: nor shall AT t j 

. l\o refunds may 

any such carrier refund or remit in any manner or by any device any £ e ma J e ex cept 

portion of the rates, fares or charges so specified, except upon order by order of 

of the commission as hereinafter provided, nor extend to any corpora- Com 

tion or person any privilege or facility in the transportation of Facilities and 

passengers or property except such as are regularly and uniformly privileges must 

extended to all corporations and persons. 

3. No common carrier subject to the provisions of this act shall. Free and 

directly or indirectly, issue, give or tender any free ticket, free pass reduced rate 

or free or reduced-rate transportation for passengers between points : ans P° rtatl ° 

.,.,. • rr i prohibited 

within this state, except to its officers, agents, employees, attorneys, 

physicians and surgeons, and members of their families; to ministers 
of religion, traveling secretaries of railroad men's religious associa- 
tions, or executive officers, organizers or agents of railroad employees' 
mutual benefit associations giving the greater portion of their time 
to the work of any such association; inmates of hospitals or charitable 
or eleemosynary institutions, and persons exclusively engaged in 
charitable or eleemosynary work, and persons and property engaged 
or employed in educational work or scientific research when permitted 
by the commission ; to the executive officers of mercantile or promotion 
boards or bodies within this state when traveling in the performance 
of duties affecting the advancement of the business of such boards 
or bodies, or the development of trade or industry within or without 
this state, when authorized by the commission; to hotel employees of 
season resort hotels, when authorized by the commission; to indigent, 
destitute and homeless persons and to such persons when transported 
by charitable societies or hospitals, and the necessary agents 
employed in such transportation; to inmates of the national homes or 
state homes for disabled volunteer soldiers and of soldiers' and 
sailors' homes, including those about to enter and those returning 
home after discharge; to necessary caretakers, going and returning, 
of live stock, poultry, milk, fruit and other freight, under uniform 
and non-discriminatory regulations; to employees of sleeping car 



190 LOUIS SLOSS & CO . 

corporations, express corporations and telegraph and telephone cor- 
porations; to railway mail service employees, United States internal 
revenue officers, post office inspectors, customs officers and inspectors 
and immigration inspectors when traveling in the course of their 
official duty; to newsboys on trains, baggage agents, witnesses 
attending any legal investigation in which the carrier is interested, 
persons injured in accidents or wrecks and physicians and nurses 
Term attenc hng sucn persons; provided, that the term "employees/* as 
"Employees" used in this section, shall include furloughed, pensioned and super- 
defined. annuated employees, persons who have become disabled or infirm 
in the service of any such carrier, ex-employees traveling for the 
purpose of entering the service of any such carrier, and the remains 
of persons dying while in the employment of any such carrier; and 
Term *h e term "families," as used in this section, shall include the families 
"Families' 1 of those persons heretofore named in this proviso, the families of 
defined, persons killed, and the widows during widowhood and minor chil- 
dren during minority of persons who died while in the service of any 
such carrier; and provided, further, that no free ticket, free pass or 
Shippers free or reduced-rate transportation shall be issued, given or tendered 
of freight to any officer, agent or employee of a common carrier, who is at the 
same time a shipper or receiver of freight, or an officer, agent or 
employee of a shipper or receiver of freight, unless such officer, agent 
or employee devotes substantially his entire time to the service of such 
carrier; and provided, further, that the members of the railroad 
commission, their officers and employees, shall be entitled, when in 
the performance of their official duties, to free transportation over the 
Transportation lines of all common carriers within this state; and provided, further, 
in exchange for that passenger transportation may issue to the proprietors and 
advertising, employees of newspapers and magazines and the members of their 
immediate families, in exchange for advertising space in such news- 
papers or magazines at full rates, subject however to such reasonable 
restrictions as the commission may impose. 
Free Nothing in this act contained shall be construed to prohibit the 
transportation [ ssue by express corporations of free or reduced-rate transportation 
,s for express matter to their officers, agents, employees, attorneys, 
personal use P nvs i c i ans an ^ surgeons, and members of their families, or the 
interchange of free or reduced-rate transportation for passengers or 
express matter between common carriers, their officers, agents, 



PUBLIC UTILITIES ACT 191 



employees, attorneys, physicians and surgeons, and members of their 

families; provided, that such express matter be for the personal use 

of the person to or for whom such free or reduced-rate transportation 

is granted, or of his family: nor to prohibit the issue of passes or franks Free telephone 

by telegraph or telephone corporations to their officers, agents, and telegraph 

employees, attorneys, physicians and surgeons, and members of their 

families, or the exchange of passes or franks between such telegraph 

and telephone corporations or between such corporations and such 

common carriers, for their officers, agents, employees, attorneys, 

physicians and surgeons, and members of their families: nor to p T { or contracts 

prevent the carrying out of contracts for free or reduced-rate pas- f 01 - transportation. 

senger transportation heretofore made, founded upon adequate 

consideration and lawful when made: nor to prevent a common 

carrier from transporting, storing or handling, free or at reduced 

rates, the household goods and personal effects of its employees, of Household goods 

persons entering or leaving its service, and of persons killed or dying °* em Pl }^^S' 

while in its service. , 

4. Every common carrier subject to the provisions of this act may Special cases 
transport, free or at reduced rates, persons or property for the United °' cama 8 e 
States, state, county or municipal governments, or for charitable ^' 
purposes, or to provide relief in cases of general epidemic, pestilence 
or other calamitous visitation, and property to or from fairs or 
expositions for exhibit thereat; also contractors and their employees, 
material or supplies for use or engaged in carrying out their contracts 
with said carriers, for construction, operation or maintenance work 
or work incidental thereto on the line of the issuing carrier, to the 
extent only that such free or reduced-rate transportation is provided 
for in the specifications upon which the contract is based and in the 
contract itself. Common carriers may also enter into contracts with 
telegraph and telephone corporations for an exchange of service. 

(b) Except as in this section otherwise provided, no public Schedule rates 
utility shall charge, demand, collect or receive a greater or less or *° " e cnar 8 e d» 
different compensation for any product or commodity furnished or 
to be furnished, or for any service rendered or to be rendered, than 
the rates, tolls, rentals and charges applicable to such product or 
commodity or service as specified in its schedules on file and in effect Refunds 
at the time, nor shall any such public utility refund or remit, directly P ronlDl 



192 LOUIS SLQSS & C O. 

or indirectly, in any manner or by any device, any portion of the 
rates, tolls, rentals and charges so specified, nor extend to any 
corporation or person any form of contract or agreement or any rule 
or regulation or any facility or privilege except such as are regularly 
and uniformly extended to all corporations and persons; provided, 
that the commission may by rule or order establish such exceptions 
from the operation of this prohibition as it may consider just and 
reasonable as to each public utility. 

Filing of Interstate Tariffs. 

Common Sec. 1 8. Every common carrier and every telegraph and 
amersmust telephone corporation shall print and file or cause to be filed with 
the commission schedules showing all the rates, fares, tolls, rentals, 
charges and classifications for the transportation of persons or 
property or the transmission of messages or conversations between all 
points within this state and all points without the state upon its route, 
and between all points within this state and all points without the 
state upon every route leased, operated or controlled by it, and 
between all points on its route or upon any route, leased, operated 
or controlled by it within this state and all points without the state 
upon the route of any other common carrier or telegraph or telephone 
corporation, whenever a through route and joint rate shall have been 
established between any two such points. 

Preferences. 

Sec. 19. No public utility shall, as to rates, charges, service, 

must not grant facilities or in any other respect, make or grant any preference or 

advantage to any corporation or person or subject any corporation 

" or person to any prejudice or disadvantage. No public utility shall 

Nor discriminate estaDnsn or maintain any unreasonable difference as to rates, charges, 

between localities service, facilities or in any other respect, either as between localities 

nor classes or as between classes of service. The commission shall have the 

power to determine any question of fact arising under this section. 

Economies: Profit from to Inure to Public Utility. 

Sec. 20. Nothing in this act shall be taken to prohibit any 
public utility from itself profiting, to the extent permitted by the 



PUBLIC UTILITIES ACT 



193 



commission, from any economies, efficiencies or improvements which Commission may 
it may make, and from distributing by way of dividends, or other- permit utilities 
wise disposing of, the profits to which it may be so entitled, and the 
commission is authorized to make or permit such arrangement or 
arrangements with any public utility as it may deem wise for the 
purpose of encouraging economies, efficiencies or improvements and 
securing to the public utility making the same such portion, if any, 
of the profits thereof as the commission may determine. 



dividends by 
reason of 
economies. 



Sliding Scale of Charges: Profit Sharing. 

Sec. 21. Nothing in this act shall be taken to prohibit a cor- 
poration or person engaged in the production, generation, transmission 
or furnishing of heat, light, water or power, or telegraph or telephone 
service, from establishing a sliding scale of charges; provided, that 
a schedule showing such scale of charges shall first have been filed 
with the commission and such schedule and each rate set out therein 
approved by it. Nothing in this act shall be taken to prohibit any 
such corporation or person from entering into an arrangement for a 
fixed period for the automatic adjustment of charges for heat, light, 
water or power, or telegraph or telephone service, in relation to the 
dividends to be paid to stock holders of such corporation, or the 
profit to be realized by such person; provided, that a schedule 
showing the scale of charges under such arrangement shall first have 
been filed with the commission and such schedule and each rate set 
out therein approved by it. Nothing in this section shall prevent the 
commission from revoking its approval at any time and fixing other 
rates and charges for the product or commodity or service, as 
authorized by this act. 



Under certain 
conditions public 
utilities may 
establish a 
sliding scale. 



Automatic 
adjustment 
of rates. 



Discrimination Between Utilities inter se Prohibited: 
Connecting Lines. 

Sec. 22. (a) Every common carrier shall afford all reason- 
able, proper and equal facilities for the prompt and efficient 
interchange and transfer of passengers, tonnage and cars, loaded or 
empty, between the lines owned, operated, controlled or leased by 
it and the lines of every other common carrier, and shall make such 
interchange and transfer promptly without discrimination between 



Common 
carriers must 
provide facilities 
for interchange 
of business 
without 
discrimination. 



194 LOUIS SLOSS & CO. 

shippers, passengers or carriers either as to compensation charged, 
service rendered or facilities afforded. Every railroad corporation 
shall receive from every other railroad corporation, at any point of 
connection, freight cars of proper standard and in proper condition, 
and shall haul the same either to destination, if the destination be 
upon a line owned, operated or controlled by such railroad cor- 
poration, or to point of transfer according to route billed, if the 
destination be upon the line of some other railroad corporation. 
Nothing in this section contained shall be construed as in anywise 

. j j. S j j limiting or modifying the duty of a common carrier to establish joint 

established. , . . , , f . 

rates, tares and charges tor the transportation or passengers and 

property over the lines owned, operated, controlled or leased by it 

and the lines of other common carriers, nor as in any manner limiting 

or modifying the power of the commission to require the establishment 

of such joint rates, fares and charges. 

(b) Every telephone corporation and telegraph corporation 

v \ ' i operating in this state shall receive, transmit and deliver, without 

tions must inter- .. . . . . . . . , 

change business discrimination or delay, the conversations and messages or every 

under certain other telephone or telegraph corporation with whose line a physical 

conditions, connection may have been made. 

False Billing, etc., by Carrier or Shipper: False 
Claims for Damages. 

False billing and Sec. 23. (a) No common carrier, or any officer or agent 
7S ^ S thereof, or any person acting for or employed by it, shall, by means 
of known false billing, classification, weight, weighing, or report of 
weight, or by any other device or means assist, suffer or permit any 
corporation or person to obtain transportation for any person or 
property between points within this state at less than the rates and 
fares then established and in force as shown by the schedules filed 
and in effect at the time. No person, corporation, or any officer, 
agent or employee of a corporation shall, by means of false billing, 
false or incorrect classification, false weight or weighing, false 
representation as to contents or substance of a package, or false 
report or statement of weight, or by any other device or means, 
whether with or without the consent or connivance of a common 



PUBLIC UTILITIES ACT 195 

carrier or any of its officers, agents or employees, seek to obtain or 
obtain such transportation for such property at less than the rates 
then established and in force therefor. 

(b) No person or corporation, or any officer, agent or employee False claims 
of a corporation, shall knowingly, directly or indirectly, by any false prohibited. 
statement or representation as to cost or value, or the nature or 
extent of an injury, or by the use of any false billing, bill of lading, 
receipt, voucher, roll, account, claim, certificate, affidavit or depo- 
sition, or upon any false, fictitious or fraudulent statement or entry, 
obtain or attempt to obtain any allowance, rebate or payment for 
damage, in connection with or growing out of the transportation of 
persons or property, or an agreement to transport such persons or 
property, whether with or without the consent or connivance of a 
common carrier or any of its officers, agents or employees; nor shall 
any common carrier, or any officer, agent or employee thereof, 
knowingly pay or offer to pay any such allowance, rebate or claim 
for damage. 

Long and Short Haul and Service. 

Sec. 24. (a) No common carrier subject to the provisions of Regulation of 
this act shall charge or receive any greater compensation in the * on £ an " snor * 
aggregate for the transportation of persons or of a like kind of 
property for a shorter than for a longer distance over the same line 
or route in the same direction, within this state, the shorter being 
included within the longer distance, or charge any greater compen- 
sation as a through rate than the aggregate of the intermediate rates; 
but this shall not be construed as authorizing any such common 
carrier to charge or receive as great a compensation for a shorter as 
for a longer distance or haul. Upon application to the commission, 
such common carrier may, in special cases, after investigation, be 
authorized by the commission to charge less for a longer than for 
a shorter distance for the transportation of persons or property, and 
the commission may from time to time prescribe the extent to which 
such carrier may be relieved from the operation and requirements Regulation of 
of this section. long an d short 

distance telephone 

(b) No telephone or telegraph corporation subject to the pro- and telegraph 

visions of this act shall charge or receive any greater compensation rates. 



196 LOUIS SLOSS & CO. 

in the aggregate for the transmission of any long distance message 
or conversation for a shorter than for a longer distance oyer the 
same line or route in the same direction, within this state, the shorter 
being included within the longer distance, or charge any greater 
compensation for a through service than the aggregate of the inter- 
mediate rates or tolls subject to the provisions of this act; but this 
shall not be construed as authorizing any such telephone or telegraph 
corporation to charge and receive as great a compensation for a 
shorter as for a longer distance. Upon application to the commission, 
a telephone or telegraph corporation may, in special cases, after 
investigation, be authorized by the commission to charge less for a 
longer than for a shorter distance service for the transmission of 
messages or conversations, and the commission may from time to time 
prescribe the extent to which such telephone or telegraph corporation 
may be relieved from the operation and requirements of this section. 

Switch and Spur Connections. 

Railroads Sec. 25. (a) Every railroad corporation, upon the application 

must provide of any corporation or person, being a shipper or receiver or contem- 

switches and plated shipper or receiver of freight, for a connection between the 

P "P on railroad of such railroad corporation and any existing or contemplated 

private track, tracks or railroad of such corporation or person, shall 

make such connection and provide such switches and tracks as may 

be necessary for that purpose and deliver and receive cars thereover; 

provided, that such connection is reasonably practicable and can be 

installed and used without materially increasing the hazard of the 

operation of the railroad with which such connection is sought, and 

that the business which may reasonably be expected to be received 

by such railroad corporation over such connection is sufficient to 

justify the expense of such connection to such railroad corporation. 

(b) Under the conditions specified in the proviso in sub-section 

., (a) hereof, every railroad corporation, upon the application of any 

Spurs on ran- v 7 . , . ,. . . , 

w corporation or person, being a shipper or receiver or contemplated 

property, shipper or receiver of freight, shall construct upon its right of way 

a spur or spurs for the purpose of receiving and delivering freight 

thereby, and shall receive and deliver freight thereby. 



PUBLIC UTILITIES ACT 197 



Foreign Public Utilities Excluded. 

Sec. 26. No foreign corporation, other than those which by a Limitation 
compliance with the laws of this state are entitled to transact a P* ac ; 
public utility business within this state, shall henceforth transact *°*y. g 
within this state any public utility business, nor shall any foreign cor p ora f{ ons 
corporation which is at present lawfully transacting business within 
this state henceforth transact within this state any public utility 
business of a character different from that which it is at present 
authorized by its charter or articles of incorporation to transact, nor 
shall any license, permit or franchise to own, control, operate or 
manage any public utility business or any part or incident thereof 
be henceforth granted or transferred, directly or indirectly, to any 
foreign corporation which is not at present lawfully transacting 
within this state a public utility business of like character; provided, 
that foreign corporations engaging in commerce with foreign nations 
or commerce among the several states of this Union may transact 
within this state such commerce and intrastate commerce of a like 
character. 

Fares and Transfers on Street Railroads. 

Sec. 27. No street or interurban railroad corporation shall Street car fare 
charge, demand, collect or receive more than five cents for one ^limr 
continuous ride in the same general direction within the corporate 
limits of any city and county, or city or town, except upon a showing 
before the commission that such greater charge is justified; provided, 
that until the decision of the commission upon such showing, a street 
or interurban railroad corporation may continue to demand, collect 
and receive the fare in effect on October 10, 1911, or at the time 
the commission acquires as to such corporation the power to fix fares 
within such city and county, or city or town. Every street or 
interurban railroad corporation shall upon such terms as the com- 
mission shall find to be just and reasonable furnish to its passengers 
transfers entitling them to one continuous trip in the same general Transfers must 
direction over and upon the portions of its lines within the same city be given . . . 
and county, or city or town, not reached by the originating car. 



198 



LOUIS SLOSS & CO. 



All public 

utilities must 

furnish desired 

information. 



Must anstver 
all questions. 



Must furnish 

copies of 

records. 

Complete 

inventory of 

property. 

Information 

confidential 

unless ordered 

published by 

commission. 

Violation of 

confidence a 

misdemeanor. 



Requests for Information: Blanks: Copies of Record. 

Sec. 28 (a) Every public utility shall furnish to the commission 
in such form and such detail as the commission shall prescribe all 
tabulations, computations and all other information required by it 
to carry into effect any of the provisions of this act, and shall make 
specific answers to all questions submitted by the commission. 

(b) Every public utility receiving from the commission any 
blanks with directions to fill the same shall cause the same to be 
properly filled out so as to answer fully and correctly each question 
propounded therein; in case it is unable to answer any question, it 
shall give a good and sufficient reason for such failure. 

(c) Whenever required by the commission, every public utility 
shall deliver to the commission copies of any or all maps, profiles, 
contracts, agreements, franchises, reports, books, accounts, papers 
and records in its possession or in any way relating to its property 
or affecting its business, and also a complete Inventory of all its 
property in such form as the commission may direct. 

(d) No information furnished to the commission by a public 
utility, except such matters as are specifically required to be open to 
public inspection by the provisions of this act, shall be open to public 
inspection or made public except on order of the commission, or by 
the commission or a commissioner in the course of a hearing or 
proceeding. Any officer or employee of the commission who, in 
violation of the provisions of this sub-section, divulges any such 
information shall be guilty of a misdemeanor. 



All public 

utilities must 

report annually. 



Reports. 

Sec 29. Every public utility shall annually furnish to the 
commission at such time and in such form as the commission may 
require a report in which the utility shall specifically answer all 
questions propounded by the commission upon or concerning which 
the commission may desire information. The commission shall have 
authority to require any public utility to file monthly reports of 
earnings and expenses, and to file periodical or special, or both 
periodical and special reports concerning any matter about which 



PUBLIC UTILITIES ACT 199 

the commission is authorized by this or any other act to inquire or 
to keep itself informed, or which it is required to enforce. All 
reports shall be under oath when required by the commission. 

Compliance with Commission's Orders. 

Sec. 30. Every public utility shall obey and comply with each Public utilities 

and every requirement of every order, decision, direction, rule or shall obex? 

regulation made or prescribed by the commission in the matters a ^ ora [ er f °f 
, . -r i .i • i .• commission. 

herein specified, or any other matter in any way relating to or 

affecting its business as a public utility, and shall do everything 
necessary or proper in order to secure compliance with and observ- 
ance of every such order, decision, direction, rule or regulation by 
all of its officers, agents and employees. 

ARTICLE III. 
POWERS AND DUTIES OF RAILROAD COMMISSION. 

Powers of Commission. 

Sec. 3 1 . The railroad commission is hereby vested with power Commission to 
and jurisdiction to supervise and regulate every public utility in the control all 
state and to do all things, whether herein specifically designated P Mlc utilities. 
or in addition thereto, which are necessary and convenient in the 
exercise of such power and jurisdiction. 

Charges to Be Fixed by Commission. 

Sec 32. (a) Whenever the commission, after a hearing had To fix rates. 
upon its own motion or upon complaint, shall find that the rates, 
fares, tolls, rentals, charges or classifications, or any of them, 
demanded, observed, charged or collected by any public utility for 
any service or product or commodity, or in connection therewith, 
including the rates or fares for excursion or commutation tickets, or 
that the rules, regulations, practices or contracts, or any of them, 
affecting such rates, fares, tolls, rentals, charges or classifications, 
or any of them, are unjust, unreasonable, discriminatory or prefer- 
ential, or in anywise in violation of any provision of law, or 
that such rates, fares, tolls, rentals, charges or classifications are 
insufficient, the commission shall determine the just, reasonable or 



200 LOUIS SLOSS & CO. 



sufficient rates, fares, tolls, rentals, charges, classifications, rules, 
regulations, practices or contracts to be thereafter observed and in 
force, and shall fix the same by order as hereinafter provided. 

(b) The commission shall have power, upon a hearing, had 
e upon its own motion or upon complaint, to investigate a single rate, 
fare, toll, rental, charge, classification, rule, regulation, contract or 
practice, or any number thereof, or the entire schedule or schedules 
of rates, fares, tolls, rentals, charges, classifications, rules, regula- 
tions, contracts and practices, or any thereof, of any public utility, 
and to establish new rates, fares, tolls, rentals, charges, classifications, 
rules, regulations, contracts or practices, or schedule or schedules, 
in lieu thereof. 



Joint Rates and Through Routes on Common Carriers. 

To fix joint Sec. 33. Whenever the commission, after a hearing had upon 
rates. jt s own motion or upon complaint, shall find that the rates, fares 
or charges in force over two or more common carriers, between any 
two points in this state, are unjust, unreasonable or excessive, or that 
no satisfactory through route or joint rate, fare or charge exists 
between such points, and that the public convenience and necessity 
demand the establishment of a through route and joint rate, fare 
or charge between soch points, the commission may order such 
common carriers to establish such through route and may establish 
and fix a joint rate, fare or charge which will be fair, just, reason- 
able and sufficient, to be followed, charged, enforced, demanded 
and collected in the future, and the terms and conditions under 

May order which such through route shall be operated. The commission may 
order that freight moving between such points shall be carried by 
the different common carriers, parties to such through route and 
joint rate, without being transferred from the originating cars. In 
case the common carriers do not agree upon the division between 
them of the joint rates, fares or charges established by the commis- 
MaD establish s * on over suc ^ tnrou § n routes, the commission shall, after hearing, 
division of rates °y supplemental order, establish such division ; provided, that where 

on through any railroad which is made a party to a through route has itself 
business. over jt s own }{ ne an equally satisfactory through route between the 



PUBLIC UTILIT IES ACT 201 

termini of the through route established, such railroad shall have 

the right to require as its division of the joint rate, fare or charge 

its local rate, fare or charge over the portion of its line comprised 

in such through route, and the commission may, in its discretion, 

allow to such railroad more than its local rate, fare, or charge 

whenever it will be equitable so to do. I 1 « commission shall have 

the power to establish and fix through routes and joint rates, fares 

j " common carriers 

or charges over common carriers and stage or auto stage lines and stage and auto 

to fix the division of such joint rates, fares or charges. stage lines. 

Interstate Rates. 

Sec. 34. The commission shall have the power to investigate To investigate 

all existing or proposed interstate rates, fares, tolls, charges and 

etc. 
classifications, and all rules and practices in relation thereto, for or 

in relation to the transportation of persons or property or the trans- 
mission of messages or conversations, where any act in relation 
thereto shall take place within this state; and when the same are, 
in the opinion of the commission, excessive or discriminatory or in 
violation of the act of congress entitled "An act to regulate com- 
merce," approved February fourth, eighteen hundred and eighty- 
seven, and the acts amendatory thereof and supplementary thereto, 

or of any other act of congress, or in conflict with the rulings, orders %t 

, . fir r> r> •• i ■ May petition 

or regulations or the Interstate Commerce Commission, the commis- / n f ers f a / e 

sion may apply by petition or otherwise to the Interstate Commerce Commerce 

Commission or to any court of competent jurisdiction for relief. Commission. 

Service, Equipment, Facilities — to Be Fixed by the 
Commission. 

Sec 35. Whenever the commission, after a hearing had upon Commission to 
its own motion or upon complaint, shall find that the rules, regula- protect public 
tions, practices, equipment, appliances, facilities or service of any 
public utility, or the methods of manufacture, distribution, trans- * 
mission, storage or supply employed by it, are unjust, unreasonable, , .i.S 
unsafe, improper, inadequate or insufficient, the commission shall 
determine the just, reasonable, safe, proper, adequate or sufficient 
rules, regulations, practices, equipment, appliances, facilities, service 
or methods to be observed, furnished, constructed, enforced or 



202 LOUIS SLOSS & CO. 



employed and shall fix the same by its order, rule or regulation. 
Trie commission shall prescribe rules and regulations for the per- 
formance of any service or the furnishing of any commodity of the 
character furnished or supplied by any public utility, and, on proper 
demand and tender of rates, such public utility shall furnish such 
commodity or render such service within the time and upon the 
conditions provided in such rules. 

Power of Commission to Order Additions, Improvements, 

Changes. 

Commission Sec. 36. Whenever the commission, after a hearing had upon 

may order fa own mo tion or upon complaint, shall find that additions, exten- 

ex c in s j ons re p a i rs or improvements to, or changes in, the existing plant, 

improvements . ..... . , . , , 

of service e( 3 ul P ment . apparatus, facilities or other physical property or any 

public utility or of any two or more public utilities ought reasonably 

New buildings to °e made, or that a new structure or structures should be erected, 

for convenience to promote the security or convenience of its employees or the public, 

of employees or m anv other way to secure adequate service or facilities, the 

commission shall make and serve an order directing that such 

additions, extensions, repairs, improvements or changes be made or 

May specify sucn structure or structures be erected in the manner and within 

manner of the time specified in said order. If the commission orders the 

building erection of a new structure, it may also fix the site thereof. If any 

additions, extensions, repairs, improvements or changes, or any new 

structure or structures which the commission has ordered to be 

erected, require joint action by two or more public utilities, the 

May order commission shall notify the said public utilities that such additions, 

joint action by extensions, repairs, improvements or changes or new structure or 

public utilities, structures have been ordered and that the same shall be made at 

their joint cost, whereupon the said public utilities shall have such 

reasonable time as the commission may grant within which to agree 

upon the portion or division of cost of such additions, extensions, 

repairs, improvements or changes or new structure or structures, which 

each shall bear. If at the expiration of such time such public utilities 

shall fail to file with the commission a statement that an agreement 

has been made for a division or apportionment of the cost or expense 

of such additions, extensions, repairs, improvements or changes, or 



PUBLIC UTILITIES ACT 201 



new structure or structures, the commission shall have authority, Commission 
after further hearing, to make an order fixing the proportion of such ma V fi x 
cost or expense to be borne by each public utility and the manner P ro P . 

in which the same shall be paid or secured. manner paid 

Power of Commission to Order Changes in Time Sched- 
ules and Running of Additional Cars and Trains. 

Sec. 37. Whenever the commission, after a hearing had upon Commission 

its own motion or upon complaint, shall find that any railroad ma V order 

corporation or street railroad corporation does not run a sufficient su tt lc ^ et 

. . tf . number trains 

number or trains or cars, or possess or operate sufficient motive power, ^ accommodate 

reasonably to accommodate the traffic, passenger or freight, trans- traffic. 
ported by or offered for transportation to it, or does not run its 
trains or cars with sufficient frequency or at a reasonable or proper 
time having regard to safety, or does not stop the same at proper 
places, or does not run any train or trains, car or cars, upon a 
reasonable time schedule for the run, the commission shall have 

power to make an order directing any such railroad corporation or May change 

street railroad corporation to increase the number of its trains or of schedules. 

its cars or its motive power or to change the time for starting its May change 

trains or cars or to change the time schedule for the run of any train s ^°PP m § places 

or car, or to change the stopping place or places thereof, or to make 0T mat ? e ° 

any other order that the commission may determine to be reasonably re a u l a tions 

necessary to accommodate and transport the traffic, passenger or for the 

freight, transported or offered for transportation. accommodation 

of the public. 

Track Connections. 

Sec. 38. Whenever the commission, after a hearing had upon Commission may 

its own motion or upon complaint, shall find that the public order track 

convenience and necessity would be subserved by having connections connections 

made between the tracks of any two or more railroad or street ., e , 

•ij • i ii i r i r railroads and 

railroad corporations, so that cars may readily be transferred from 5 / ree j car // ne5 

one to the other, at any of the points hereinafter in this section 
specified, the commission may order any two or more such corpora- 
tions owning, controlling, operating or managing tracks of the same 
gauge to make physical connections at any and all crossings, and at 
all points where a railroad or street railroad shall begin or terminate 



204 LOUIS SLOSS & CO. 

or run near to any other railroad or street railroad. After the 
necessary franchise or permit has been secured from the city and 
county, or city or town, the commission may likewise order such 
physical connection, within such city and county, or city or town, 
between two or more railroads which enter the limits of the same. 
May fix The commission shall by order direct whether the expense of 

proportion the connections referred to in this section shall be borne jointly or 

of expense, otherwise. 

Switch and Spur Connections: Interchange Switching 
to Industrial Tracks. 

Commission may Sec. 39. (a) Whenever the commission, after a hearing had 
itches U p 0n its own motion or upon complaint, shall find that application 

ac .j has been made by any corporation or person to a railroad corporation 
and prescribe . . , . . oc f . . , 

terms for use a connectlon or s P ur as provided in section Ld or this act, and 

that the railroad corporation has refused to provide such connection 
or spur and that the applicant is entitled to have the same provided 
for him under said section 25, the commission shall make an order 
requiring the providing of such connection or spur and the main- 
tenance and use of the same upon reasonable terms which the 
commission shall have the power to prescribe. Whenever any such 
connection or spur has been so provided, any corporation or person 
shall be entitled to connect with the private track, tracks or railroad 
thereby connected with the railroad of the railroad corporation and 
to use the same or to use the spur so provided upon payment to the 
party or parties incurring the primary expense of such private track, 
tracks or railroad, or the connection therewith or of such spur, of 
a reasonable proportion of the cost thereof to be determined by the 
commission after notice to the interested parties and a hearing thereon ; 
provided, that such connection and use can be made without 
unreasonable interference with the rights of the party or parties 
incurring such primary expense. 



(b) The commission shall likewise have the power to require 
one railroad corporation to switch to private spurs and industrial 
tracks upon its own railroad the cars of a connecting railroad 
corporation and to prescribe the terms and compensation for such 
service. 



service to 
private spurs 



PUBLIC UTILITIES ACT 205 

Physical Connections and Joint Rates — Telephone and 
Telegraph Corporations. 

Sec. 40. Whenever the commission, after a hearing had upon Commission may 

its own motion or upon complaint, shall find that a physical order physical 

connection can reasonably be made between the lines of two or £ or 

more telephone corporations or two or more telegraph corporations , 7 

,. , . . telephone ana 

whose lines can be made to form a continuous line or communication, i e l e g ra p n \{ nes 

by the construction and maintenance of suitable connections for the ' m specified cases. 
transfer of messages or conversations, and that public convenience 
and necessity will be subserved thereby, or shall find that two or 
more telegraph or telephone corporations have failed to establish 
joint rates, tolls or charges for service by or over their said lines, 
and that joint rates, tolls or charges ought to be established, the 
commission may, by its order, require that such connection be made, 
except where the purpose of such connection is primarily to secure 
the transmission of local messages or conversations between points 
within the same city and county, or city or town, and that conver- 
sations be transmitted and messages transferred over such connection 
under such rules and regulations as the commission may establish, 
and prescribe through lines and joint rates, tolls and charges to be May fix joint 
made, and to be used, observed and in force in the future. If such telephone and 
telephone or telegraph corporations do not agree upon the division ' 
between them of the cost of such physical connection or connections 
or the division of the joint rates, tolls or charges established by the 
commission over such through lines, the commission shall have 
authority, after further hearing, to establish such division by 
supplemental order. 

Use of Joint Facilities. 

Sec. 41. Whenever the commission, after a hearing had upon May order 

its own motion or upon complaint of a public utility affected, shall joint use of 

find that public convenience and necessity require the use by one facilities and 

public utility of the conduits, subways, tracks, wires, poles, pipes eam P n 

.i _ • _ - £ i L over or under 

or other equipment, or any part thereof, on, over, or under any street . . 

or highway, and belonging to another public utility, and that such 

use will not result in irreparable injury to the owner or other users 

of such conduits, subways, tracks, wires, poles, pipes or other 



206 LOUIS SLOSS & CO. 



equipment or in any substantial detriment to the service, and that 

such public utilities have failed to agree upon such use or the terms 

and conditions or compensation for the same, the commission may 

by order direct that such use be permitted, and prescribe a reasonable 

compensation and reasonable terms and conditions for the joint use. 

Public utility If such use be directed, the public utility to whom the use is 

using other p erm jtted shall be liable to the owner or other users of such con- 

• . duits, subways, tracks, wires, poles, pipes or other equipment for 

liable for suc ^ damage as mav result therefrom to the property of such owner 

damage, or other users thereof. 

Health and Safety: Safety Devices. 

Commission to Sec. 42. The commission shall have power, after a hearing 
t neattn nac j U p 0n jt s own motion or upon complaint, by general or special 
i fi hi or< ^ ers » ru ^ es or regulations, or otherwise, to require every public 
utility to maintain and operate its line, plant, system, equipment, 
apparatus, tracks and premises in such manner as to promote and 
safeguard the health and safety of its employees, passengers, 
customers, and the public, and to this end to prescribe, among 
other things, the installation, use, maintenance and operation of 
appropriate safety or other devices or appliances, including inter- 
locking and other protective devices at grade crossings or junctions 
and block or other systems of signalling, to establish uniform or 
other standards of equipment, and to require the performance of 
any other act which the health or safety of its employees, passen- 
gers, customers or the public may demand. 

Grade Crossings. 

Grade Sec. 43. (a) No public road, highway or street shall here- 

c y.^} n ^ s a fter be constructed across the track of any railroad corporation 

• at grade, nor shall the track of any railroad corporation be 
except. . ... i ■ . i i 

constructed across a public road, highway or street at grade, nor 

shall the track of any railroad corporation be constructed across 

the track of any other railroad or street railroad corporation at 

grade, nor shall the track of a street railroad corporation be 

constructed across the track of a railroad corporation at grade, 

without having first secured the permission of the commission; 



PUBLIC UTILITIES ACT 207 

provided, that this subsection shall not apply to the replacement 
of lawfully existing tracks. The commission shall have the right 
to refuse its permission or to grant it upon such terms and conditions 
as it may prescribe. 

(b) Hie commission shall have the exclusive power to All railroad 

determine and prescribe the manner, including the particular point ^°f s f"£ s under 

of crossing, and the terms of installation, operation, maintenance, * n 

. , , r -iii i Commission. 

use and protection or each crossmg or one railroad by another 

railroad or street railroad, and of a street railroad by a railroad, 

and of each crossing of a public road or highway by a railroad 

or street railroad and of a street by a railroad or vice versa, 

subject to the provisions of section 2694 of the Political Code, so 

far as applicable, and to alter or abolish any such crossing, and May abolish 

to require where, in its judgment, it would be practicable, a < 

separation of grades at any such crossing heretofore or hereafter May require 

established and to prescribe the terms upon which such separation se P°J auon °f 

shall be made and the proportions in which the expense of the l 

alteration or abolition of such crossings or the separation of such 

grades shall be divided between the railroad or street railroad Cost of work to 

corporations affected or between such corporations and the state, ^ e " rvr " e "« 

county, municipality or other public authority in interest. 

Investigation of Accidents: Reports to Commission. 

Sec. 44. The commission shall investigate the cause of all All accidents 

accidents occurring within this state upon the property of any ' 

public utility or directly or indirectly arising from or connected p » 7. » 

with its maintenance or operation, resulting in loss of life or immediately) 

injury to person or property and requiring, in the judgment of the reported to 

commission, investigation by it, and shall have the power to make Commission. 
such order or recommendation with respect thereto as in its 
judgment may seem just and reasonable; provided, that neither 
the order or recommendation of the commission nor any accident 
report filed with the commission shall be admitted as evidence in 

any action for damages based on or arising out of the loss of n r q 

life, or injury to person or property, in this section referred to. mission to 

Every public utility is hereby required to file with the commission, investigate. 



208 LOUIS SLOSS & CO. 

under such rules and regulations as the commission may prescribe, 
a report of each accident so occurring of such kinds or classes as 
the commission may from time to time designate. 

Power of Commission to Provide Rules for Expediting 

Traffic: Express and Telegraph Rules 

and Regulations. 

Commission to Sec. 45. (a) The commission shall have power to provide 

establish demur- by proper rules and regulations the time within which all railroad 

corporations shall furnish, after demand therefor, all cars, equipment 

and facilities necessary for the handling of freight in carload and 

less than carload lots, the time within which consignors or persons 

Time allowed ordering cars shall load the same, and the time within which 

for loading consignees or persons to whom freight may be consigned shall unload 

hng. anc } discharge the same and receive freight from the freight rooms, 

and to provide penalties to be paid for failure on the part of the 

railroad corporations, consignors and consignees to conform to such 

Fix demurrage rules. Charges for demurrage shall be uniform so that the same 

charges, penalty shall be paid by both shipper or consignee and railroad 

corporation for an equal number of cars for each day for which 

demurrage is charged. 

(b) The commission shall also have power to provide the 

express ^ me within which express packages shall be received, gathered, 

packages, transported and delivered at destination, and the limits within which 

telephone and express packages shall be gathered and distributed and telegraph 

7 and telephone messages delivered without extra charge. 
messages. 

Power of Commission as to Service, etc., of Public 
Utilities. 

Commission to Sec 46. (a) The commission shall have power, after hearing 
regulate electric, nac J U p on its own motion or upon complaint, to ascertain and fix 
7 just and reasonable standards, classifications, regulations, practices, 
measurements or service to be furnished, imposed, observed and 
followed by all electrical, gas and water corporations; to ascertain 
and fix adequate and serviceable standards for the measurement 
of quantity, quality, pressure, initial voltage or other condition 



PUBLIC UTILITIES ACT 



209 



pertaining to the supply of the product, commodity or service 
furnished or rendered by any such public utility; to prescribe 
reasonable regulations for the examination and testing of such 
product, commodity or service and for the measurement thereof; 
to establish reasonable rules, regulations, specifications and standards 
to secure the accuracy of all meters and appliances for measurements; 
and to provide for the examination and testing of any and all 
appliances used for the measurement of any product, commodity or 
service of any such public utility. 

(b) The commissioners and their officers and employees shall 
have power to enter upon any premises occupied by any public utility, 
for the purpose of making the examinations and tests and exercising 
any of the other powers provided for in this act, and to set up and 
use on such premises any apparatus and appliances necessary therefor. 
The agents and employees of said public utility shall have the right 
to be present at the making of such examinations and tests. 

(c) Any consumer or user of any product, commodity or service 
of a public utility may have any appliance used in the measurement 
thereof tested upon paying the fees fixed by the commission. The 
commission shall establish and fix reasonable fees to be paid for testing 
such appliances on the request of the consumer or user, the fee to 
be paid by the consumer or user at the time of his request, but to be 
paid by the public utility and repaid to the consumer or user if the 
appliance is found defective or incorrect to the disadvantage of the 
consumer or user, under such rules and regulations as may be 
prescribed by the commission. 



To regulate 
quality. 



To regulate 
measurements. 



Public utility 
premises shall 
be open to 
Commission. 



Any consumer 
may have 
meter tested. 



Fee. 



Valuation of Property. 

Sec. 47. The commission shall have power to ascertain the value 
of the property of every public utility in this state and every fact 
which in its judgment may or does have any bearing on such value. 
The commission shall have power to make revaluations from time to 
time and to ascertain all new construction, extensions and additions 
to the property of every public utility. 



Commission to 

ascertain 

physical 

valuation of 

property. 

To ma\e 

re-valuations. 



210 LOUIS SLOSS & CO. 



Uniform System of Accounts: Access to Accounts, etc. 

Commission to Sec. 48. The commission shall have power to establish a system 
prescribe system f accounts to be kept by the public utilities subject to its jurisdiction, 
of accoun for Qr lQ c j ass if y sa jj p U bH c utilities and to establish a system of accounts 
public utilities. . . . , ... • i • i , 

tor each class, and to prescribe the manner in which such accounts 

shall be kept. It may also in its discretion prescribe the forms of 
accounts, records and memoranda to be kept by such public utilities, 

To prescribe including the accounts, records and memoranda of the movement of 
forms for traffic as well as the receipts and expenditures of moneys, and any 
other forms, records and memoranda which in the judgment of the 
commission may be necessary to carry out any of the provisions of 
this act. The system of accounts established by the commission and 
the forms of accounts, records and memoranda prescribed by it shall 
not be inconsistent, in the case of corporations subject to the provisions 
of the act of congress entitled "An act to regulate commerce," 
approved February fourth, eighteen hundred and eighty-seven, and 
the acts amendatory thereof and supplementary thereto, with the 
systems and forms from time to time established for such corporations 
by the interstate commerce commission, but nothing herein contained 
shall affect the power of the commission to prescribe forms of accounts, 
records and memoranda covering information in addition to that 
required by the interstate commerce commission. The commission 
may, after hearing had upon its own motion or upon complaint, 
prescribe by order the accounts in which particular outlays and receipts 
shall be entered, charged or credited. Where the commission has 
prescribed the forms of accounts, records or memoranda to be kept 
by any public utility for any of its business, it shall thereafter be 
Other systems unlawful for such public utility to keep any accounts, records or 
prohibited, memoranda for such business other than those so prescribed, or those 
prescribed by or under the authority of any other state or of the United 
States, excepting such accounts, records or memoranda as shall be 
explanatory of and supplemental to the accounts, records or memoranda 
prescribed by the commission. 
Power of Com- 
mission to order Depreciation Accounts. 

carrying of 

depreciation Sec. 49. The commission shall have power, after hearing, to 
accounts, require any or all public utilities to carry a proper and adequate 



PUBLIC UTILITIES ACT 211 

depreciation account in accordance with such rules, regulations and 

forms of account as the commission may prescribe. The commission 

may, from time to time, ascertain and determine and by order fix 

the proper and adequate rates of depreciation of the several classes 

of property of each public utility. Each public utility shall conform 

its depreciation accounts to the rates so ascertained, determined and 

fixed, and shall set aside the moneys so provided for out of earnings 

and carry the same in a depreciation fund and expend such fund To prescribe 

only for such purposes and under such rules and regulations, both as to ru ' es /° r 

original expenditure and subsequent replacement as the commission expenditure of 

may prescribe. The income from investments of moneys in such fund f un j s 

shall likewise be carried in such fund. 

New Construction: Franchises and Privileges. 

Sec. 50 (a) No street railroad corporation, gas corporation, Certificate of 

electrical corporation, telephone corporation or water corporation shall public convenience 

henceforth begin the construction of a street railroad, or of a line, an necessi f 
, r • r i -i i v b e obtained 

plant or system, or or any extension or such street railroad, or line, }, e f ore beginning 

plant, or system, without having first obtained from the commission a an y nen> 

certificate that the present or future public convenience and necessity construction, 

require or will require such construction; provided, that this section except. . . 

shall not be construed to require any such corporation to secure such 

certificate for an extension within any city and county or city or town 

within which it shall have theretofore lawfully commenced operations, 

or for an extension into territory either within or without a city and 

county or city or town, contiguous to its street railroad, or line, plant 

or system, and not theretofore served by a public utility of like 

character, or for an extension within or to territory already served by 

it, necessary in the ordinary course of its business; and provided, Commission to 

further, that if any public utility, in constructing or extending its line, settle disputes as 

plant, or system, shall interfere or be about to interfere with the io } nter f ere p ce 

operation of the line, plant or system of any other public utility, ^] (m t s 

already constructed, the commission, on complaint of the public utility 

claiming to be injuriously affected, may, after hearing, make such 

order and prescribe such terms and conditions for the location of the 

lines, plants or systems affected as to it may seem just and reasonable. 



212 



LOUIS SLOSS & CO. 



must be obtained 

before exercising 

franchise rights. 



Certificate of (b) No public utility of a class specified in subsection (a) hereof 
public convenience sna U henceforth exercise any right or privilege under any franchise 
* or permit hereafter granted, or under any franchise or permit 
heretofore granted, but not heretofore actually exercised, or 
the exercise of which has been suspended for more than one year, 
without first having obtained from the commission a certificate that 
public convenience and necessity require the exercise of such right or 
privilege ; provided, that when the commission shall find, after hearing, 
that a public utility has heretofore begun actual construction work 
and is prosecuting such work, in good faith, uninterruptedly and with 
reasonable diligence in proportion to the magnitude of the undertaking, 
under any franchise or permit heretofore granted but not heretofore 
actually exercised, such public utility may proceed, under such rules 
and regulations as the commission may prescribe, to the completion 
of such work, and may, after such completion, exercise such right or 
privilege ; and provided, further, that this section shall not be construed 
to validate any right or privilege now invalid or hereafter becoming 
invalid under any law of this state. 



Articles of 

incorporation 

must be filed 

with 

Commission. 



Permit of 

proper public 

authorities must 

be had. 



Preliminary 

order may be 

secured. 



(c) Before any certificate may issue, under this section, a certified 
copy of its articles of incorporation or charter, if the applicant be a 
corporation, shall be filed in the office of the commission. Every 
applicant for a certificate shall file in the office of the commission such 
evidence as shall be required by the commission to show that such 
applicant has received the required consent, franchise or permit of the 
proper county, city and county, municipal or other public authority. 
The commission shall have power, after hearing, to issue said cer- 
tificate, as prayed for, or to refuse to issue the same, or to issue it 
for the construction of a portion only of the contemplated street 
railroad, line, plant or system, or extension thereof, or for the partial 
exercise only of said right or privilege, and may attach to the 
exercise of the rights granted by said certificate such terms and 
conditions as in its judgment the public convenience and necessity 
may require. If a public utility desires to exercise a right or 
privilege under a franchise or permit which it contemplates securing, 
but which has not as yet been granted to it, such public utility may 
apply to the commission for an order preliminary to the issue of the 
certificate. The commission may thereupon make an order declaring 
that it will thereafter, upon application, under such rules and 



PUBLIC UTILITIES ACT 213 

regulations as it may prescribe, issue the desired certificate, upon 
such terms and conditions as it may designate, after the public utility 
has obtained the contemplated franchise or permit. Upon the 
presentation to the commission of evidence satisfactory to it that 
such franchise or permit has been secured by such public utility, the 
commission shall thereupon issue such certificate. 

Transfer of Property, Franchises, etc.; Transfers of 

Stock. 

Sec. 5 1 (a) No railroad corporation, street railroad corpora- Public utilities 
tion, pipe line corporation, gas corporation, electrical corporation, may not dispose 
telephone corporation, telegraph corporation or water corporation °> cer am 
shall henceforth sell, lease, assign, mortgage or otherwise dispose of of conso l{j a f e 
or encumber the whole or any part of its railroad, street railroad, without 
line, plant or system, necessary or useful in the performance of its permission of 
duties to the public, or any franchise or permit or any right there- Commission. 
under, nor by any means whatsoever, direct or indirect, merge or 
consolidate its railroad, street railroad, line, plant or system, or 
franchises or permits or any part thereof, with any other public 
utility, without having first secured from the commission an order 
authorizing it so to do. Every such sale, lease, assignment, mort- Sales without 
gage, disposition, encumbrance, merger or consolidation made other order of 
than in accordance with the order of the commission authorizing the Commission 
same shall be void. The permission and approval of the commission 
to the exercise of a franchise or permit under section fifty of this act, 
or the sale, lease, assignment, mortgage or other disposition or 
encumbrance of a franchise or permit under this section shall not be 
construed to revive or validate any lapsed or invalid franchise or 
permit, or to enlarge or add to the powers or privileges contained in 
the grant of any franchise or permit, or to waive any forfeiture. 
Nothing in this subsection contained shall be construed to prevent Property 
the sale, lease or other disposition by any public utility of a class which may ^ 
designated in this subsection of property which is not necessary or " . . E 
useful in the performance of its duties to the public, and any sale q • • 
of its property by such public utility shall be conclusively presumed 
to have been of property which is not useful or necessary in the 
performance of its duties to the public, as to any purchaser of such 
property in good faith for value. 



214 LOUIS SLOSS & CO. 



No public (b) No public utility shall hereafter purchase or acquire, take 
utility may or k^ any part Q f t ^ e cap i ta i stoc k f any other public utility, 

„ •!? t organized or existing under or by virtue of the laws of this state, 
others without ° . 6 f . . 

permission. wltnout having been hist authorized to do so by the commission. 
Every assignment, transfer, contract or agreement for assignment or 
Transfers in transfer of any stock by or through any person or corporation to any 
violation are cor p 0ra tion or otherwise in violation of any of the provisions of this 
section shall be void and of no effect, and no such transfer shall 
be made on the books of any public utility. Nothing herein con- 
tained shall be construed to prevent the holding of stock heretofore 
lawfully acquired. 

Approval of Stocks and Stock Certificates, and Bonds, 
Notes and Other Evidences of Indebtedness. 

Issuance of Sec. 52 (a) The power of public utilities to issue 

S A/" n */T/ stocks anc * stock certificates, and bonds, notes and other 

a special ev idences of indebtedness and to create liens on their prop- 

privilege. ert y situated within this state is a special privilege, the 

right of supervision, regulation, restriction and control of 

which is and shall continue to be vested in the state, and 

Control vested such power shall be exercised as provided by law and 

in the State, under such rules and regulations as the commission may 

prescribe. 

Conditions under (b) A public utility may issue stocks and stock certifi- 

c cates, and bonds, notes and other evidences of indebtedness 

u : 1 1 9 payable at periods of more than twelve months after the 

issue stocf?s 
and bonds. date thereof, for the following purposes and no others, 

namely, for the acquisition of property, or for the con- 
struction, completion, extension or improvement of its 
facilities, or for the improvement or maintenance of its 
service, or for the discharge or lawful refunding of its 
obligations, or for the reimbursement of moneys actually 
expended from income or from any other moneys in the 
treasury of the public utility not secured by or obtained 
from the issue of stocks or stock certificates, or bonds, 
notes or other evidences of indebtedness of such public 
utility, within five years next prior to the filing of an 



PUBLIC UTILITIES ACT 215 

application with the commission for the required author- 
ization, for any of the aforesaid purposes except main- 
tenance of service and replacements, in cases where the 
applicant shall have kept its accounts and vouchers for 
such expenditures in such manner as to enable the com- 
mission to ascertain the amount of moneys so expended 
and the purposes for which such expenditure was made ; 
provided, that such public utility, in addition to the other 
requirements of law, shall first have secured from the " s " e musi ^e 

commission an order authorizing such issue and stating a ~ orr . ze . ^ 

, , , . r Commission. 

the amount thereof and the purpose or purposes to which 

the issue or the proceeds thereof are to be applied, and 
that, in the opinion of the commission, the money, property 
or labor to be procured or paid for by such issue is 
reasonably required for the purpose or purposes specified 
in the order, and that, except as otherwise permitted in the 
order in the case of bonds, notes or other evidences of 
indebtedness, such purpose or purposes are not, in whole 
or in part, reasonably chargeable to operating expenses or 
to income. To enable it to determine whether it will issue Investigations 
such order, the commission shall hold a hearing and may ^ Commission. 
make such additional inquiry or investigation, and examine 
such witnesses, books, papers, documents and contracts 
and require the filing of such data as it may deem of 
assistance. The commission may by its order grant per- 
mission for the issue of such stocks or stock certificates, 
or bonds, notes or other evidences of indebtedness in the 
amount applied for, or in a lesser amount, or not at all, 
and may attach to the exercise of its permission such 
condition or conditions as it may deem reasonable and 
necessary. The commission may authorize issues of bonds, 
notes or other evidences of indebtedness, less than, equiv- Public utilities 
alent to or greater than the authorized or subscribed capital exempt from 
stock of a public utility corporation, and the provisions of P ro \ mo ™ °f 
sections 309 and 456 of the Civil Code of this state, in so ^j™^ f tne 
far as they contain inhibitions against the creation by C { V U C0 J e 
corporations of indebtedness, evidenced by bonds, notes or limiting 
otherwise, in excess of their total authorized or subscribed indebtedness. 



216 



LOUIS SLOSS & CO. 



Proceeds from 

sale of securities 

shall be expended 

as ordered by 

the Commission. 



Right to be 

corporation and 

franchise not 

to be capitalized 

except. . . 



Contracts for 

consolidation 

may not be 

capitalized. 

Public utility 

must account 

for the proceeds 

of securities 

sold. 



capital stock shall have no application to public utility 
corporations. No public utility shall, without the consent 
of the commission, apply the issue of any stock or stock 
certificate, or bond, note or other evidence of indebtedness, 
or any part thereof, or any proceeds thereof, to any purpose 
not specified in the commission's order, or to any purpose 
specified in the commission's order in excess of the amount 
authorized for such purpose, or issue or dispose of the 
same on any terms less favorable than those specified in 
such order, or a modification thereof. A public utility 
may issue notes, for proper purposes and not in violation 
of any provision of this act or any other act, payable at 
periods of not more than twelve months after the date of 
issuance of the same, without the consent of the commis- 
sion, but no such note shall, in whole or in part, be 
refunded by any issue of stocks or stock certificates, or of 
bonds, notes of any term or character or any other evidence 
of indebtedness, without the consent of the commission. 
The commission shall have no power to authorize the 
capitalization of the right to be a corporation, or to 
authorize the capitalization of any franchise or permit 
whatsoever or the right to own, operate or enjoy any such 
franchise or permit, in excess of the amount (exclusive of 
any tax or annual charge) actually paid to the state or to 
a political subdivision thereof as the consideration for the 
grant of such franchise, permit or right; nor shall any 
contract for consolidation or lease be capitalized, nor shall 
any public utility hereafter issue any bonds, notes or other 
evidences of indebtedness against or as a lien upon any 
contract for consolidation or merger. 

(c) The commission shall have the power to require 
public utilities to account for the disposition of the pro- 
ceeds of all sales of stocks and stock certificates, and 
bonds, notes and other evidences of indebtedness, in such 
form and detail as it may deem advisable, and to establish 
such rules and regulations as it may deem reasonable and 
necessary to insure the disposition of such proceeds for the 
purpose or purposes specified in its order. 



PUBLIC UTILITIES ACT 2L7 

(d) All stock and every stock certificate, and every Stock or bonds 

bond, note or other evidence of indebtedness, of a public lssued without 

utility, issued without an order of the commission author- £. *°. M . 
** , Commission 

izing the same then in effect shall be void, and likewise all are vo (j 
stock and every stock certificate, and every bond, note or 
other evidence of indebtedness, of a public utility, issued 
with the authorization of the commission, but not conform- 
ing in its provisions to the provisions, if any, which it is 
required by the order of authorization of the commission 
to contain, shall be void; but no failure in any other 
respect to comply with the terms or conditions of the order Protection to 
of authorization of the commission shall render void any bona fide 
stock or stock certificate, or any bond, note or other ^ u 
evidence of indebtedness, except as to a corporation or 
person taking the same otherwise than in good faith and 
for value and without actual notice. 

(e) Every public utility which, directly or indirectly, Penalty for 

issues or causes to be issued, any stock or stock certificate, misuse of 

or bond, note, or other evidence of indebtedness, in non- * ocee . s m . 

. , , , r ■, • . . . S£ " e °f securities. 

conformity with the order or the commission authorizing 

the same, or contrary to the provisions of this act, or of 
the constitution of this state, or which applies the proceeds 
from the sale thereof, or any part thereof, to any purpose 
other than the purpose or purposes specified in the com- 
mission's order, as herein provided, or to any purpose 
specified in the commission's order in excess of the amount 
in said order authorized for such purpose, is subject to a 
penalty of not less than five hundred dollars nor more than 
twenty thousand dollars for each offense. 

(/) Every officer, agent or employee of a public utility Penalty for 
and every other person who knowingly authorizes, directs, fraudulent issue 
aids in, issues or executes, or causes to be issued or °f secuntles - 
executed, any stock or stock certificate, or bond, note or 
other evidence of indebtedness, in non-conformity with the 
order of the commission authorizing the same, or contrary 
to the provisions of this act, or of the constitution of this 
state, or who, in any proceeding before the commission, 



2\S LOUIS SLOSS & CO. 

knowingly makes any false statement or representation or 
with knowledge of its falsity files or causes to be filed with 
the commission any false statement or representation, 
which said statement or representation so made, filed or 
caused to be filed may tend in any way to influence the 
commission to make an order authorizing the issue of any 
stock or stock certificate, or any bond, note or other 
evidence of indebtedness, or which results in procuring 
from the commission the making of any such order, or 
who, with knowledge that any false statement or repre- 
sentation was made to the commission, in any proceeding, 
tending in any way to influence the commission to make 
such order, issues or executes or negotiates, or causes to be 
issued, executed or negotiated any such stock or stock 
certificate, or bond, note or other evidence of indebted- 
ness, or who, directly or indirectly, knowingly applies, or 
causes or assists to be applied the proceeds or any part 
thereof, from the sale of any stock or stock certificate, or 
bond, note or other evidence of indebtedness, to any 
purpose not specified in the commission's order, or to any 
purpose specified in the commission's order in excess of 
the amount authorized for such purpose, or who, with 
knowledge that any stock or stock certificate, or bond, note 
or other evidence of indebtedness, has been issued or 
executed in violation of any of the provisions of this act, 
negotiates, or causes the same to be negotiated, shall be 
guilty of a felony. 

Approval of (s) No provision of this act, and no deed or act done 
securities by or performed under or in connection therewith, shall be 
Commission held or construed to obligate the State of California to pay 
* or guarantee, in any manner whatsoever, any stock or 
stock certificate, or bond, note or other evidence of indebt- 
edness, authorized, issued or executed under the provisions 
of this act. 

(h) All stocks and stock certificates, and bonds, notes 
and other evidences of indebtedness issued by any public 
utility after this act takes effect, upon the authority of any 



PUBLIC UTILITIES ACT 219 

articles of incorporation or amendments thereto or vote of Authority of 

the stockholders or directors filed, taken or had, or other ^ ruci - es °f t 

proceedings taken or had, previous to the taking effect of VQ C fe K 

this act, shall be void, unless an order of the commission stockholders 

authorizing the issue of such stocks or stock certificates, or directors 

or bonds, notes or other evidences of indebtedness shall previous to 

have been obtained from the commission prior to such ^ m 8 e ff eci °f 

_, . . , . A - . this act not 

issue. The commission may by its order impose such sum * c i ent f or 

condition or conditions as it may deem reasonable and issuing securities 

necessary. rvilhout order of 



theC 



ommission. 



ARTICLE IV. 

PROCEDURE BEFORE RAILROAD COMMISSION 
AND COURTS. 

Rules for Hearings: Informalities. 

Sec. 53. All hearings and investigations before the commission This act and 

or any commissioner shall be governed by this act and by rules of ^ u , °t 
practice and procedure to be adopted by the commission, and in i • 

the conduct thereof neither the commission nor any commissioner 

shall be bound by the technical rules of evidence. No informality Commission 

in any proceeding or in the manner of taking testimony before the no : bound b V 

commission or any commissioner shall invalidate any order, decision, f u • i 

rule or regulation made, approved or confirmed by the commission, evidence. 

Powers of Commission as to Process: Service. 

Sec. 54. The commission and each commissioner shall have Commission has 
power to issue writs of summons, subpoenas, warrants of attachment, c ^ riam powers 
warrants of commitment and all necessary process in proceedings for . i 

contempt, in the like manner and to the same extent as courts of May issue 
record. The process issued by the commission, or any commissioner, subpoenas, etc, 
shall extend to all parts of the state and may be served by any 
person authorized to serve process of courts of record, or by any 
person designated for that purpose by the ocmmission or a commis- 
sioner. The person executing any such process shall receive such 
compensation as may be allowed by the commission, not to exceed 



220 



LOUIS SLOSS & CO. 



the fees now prescribed by law for similar services, and such fees 
shall be paid in the same manner as provided herein for payment of 
the fees of witnesses. 



Witnesses: Attendance and Fees: 
Incrimination. 



Depositions : 



Commission to 

administer oaths, 

take evidence, 

etc. 



Fees of 
witnesses. 



Proceedings for 

contempt, in 

superior courts. 



Sec. 55. (a) The commission and each commissioner shall 
have power to administer oaths, certify to all official acts, and to 
issue subpoenas for the attendance of witnesses and the production 
of papers, waybills, books, accounts, documents and testimony in 
any inquiry, investigation, hearing or proceeding in any part of the 
state. Each witness who shall appear, by order of the commission 
or a commissioner, shall receive for his attendance the same fees 
and mileage allowed by law to a witness in civil cases, which 
amount shall be paid by the party at whose request such witness 
is subpoenaed. When any witness who has not been required to 
attend at the request of any party shall be subpoenaed by the 
commission, his fees and mileage shall be paid from the funds 
appropriated for the use of the commission in the same manner as 
other expenses of the commission are paid. Any witness subpoenaed 
except one whose fees and mileage may be paid from the funds of 
the commission, may, at the time of service, demand the fee to 
which he is entitled for travel to and from the place at which he 
is required to appear, and one day's attendance. If such witness 
demands such fees at the time of service, and they are not at that 
time paid or tendered, he shall not be required to attend before the 
commission or commissioner, as directed in the subpoena. All fees 
or mileage to which any witness is entitled under the provisions of 
this section may be collected by action therefor instituted by the 
person to whom such fees are payable. No witness furnished with 
free transportation shall receive mileage for the distance he may have 
traveled on such free transportation. 

(b) The superior court in and for the county, or city and 
county, in which any inquiry, investigation, hearing or proceeding 
may be held by the commission or any commissioner shall have the 
power to compel the attendance of witnesses, the giving of testimony 
and the production of papers, including waybills, books, accounts 



PUBLIC UTILITIES ACT 221 



and documents, as required by any subpoena issued by the commis- 
sion or any commissioner. The commission or the commissioner 
before whom the testimony is to be given or produced, in case of 
the refusal of any witness to attend or testify or produce any papers 
required by such subpoena, may report to the superior court in and 
for the county, or city and county, in which the proceeding is 
pending, by petition, setting forth that due notice has been given 
of the time and place of attendance of said witness, or the 
production of said papers, and that the witness has been summoned 
in the manner prescribed in this act, and that the witness has failed 
and refused to attend or produce the papers required by the 
subpoena, before the commission or commissioner, in the cause or 
proceeding named in the notice and subpoena, or has refused to 
answer questions propounded to him in the course of such proceeding, 
and ask an order of said court, compelling the witness to attend and 
testify or produce said papers before the commission. The court, 
upon the petition of the commission or such commissioner, shall enter 
an order directing the witness to appear before the court at a time 
and place to be fixed by the court in such order, the time to be 
not more than ten days from the date of the order, and then and 
there show cause why he has not attended and testified or produced 
said papers before the commission. A copy of said order shall be 
served upon said witness. If it shall appear to the court that said 
subpoena was regularly issued by the commission or a commissioner, 
the court shall thereupon enter an order that said witness appear 
before the commission or said commissioner at the time and place 
fixed in said order, and testify or produce the required papers, and 
upon failure to obey said order, said witness shall be dealt with as 
for contempt of court. The remedy provided in this subsection is 
cumulative, and shall not be construed to impair or interfere with 
the power of the commission or a commissioner to enforce the 
attendance of witnesses and the production of papers, and to punish 
for contempt in the same manner and to the same extent as courts 
of record. 



C 



ommisswn 



(c) The commission or any commissioner or any party may, in 

.. . \,ummissv 

any investigation or hearing before the commission, cause the ma y i a h e 

deposition of witnesses residing within or without the state to be depositions. 



222 LOUIS SLOSS & CO. 

taken in the manner prescribed by law for like depositions in civil 
actions in the superior courts of this state and to that end may 
compel the attendance of witnesses and the production of books, 
waybills, documents, papers and accounts. 

Possible (d) No person shall be excused from testifying or from 

incrimination producing any book, waybill, document, paper or account in any 

no excuse for investigation or inquiry by or hearing before the commission or any 

. ... commissioner, when ordered to do so, upon the ground that the 

testimony or evidence, book, waybill, document, paper or account 

required of him may tend to incriminate him or subject him to 

penalty or forfeiture, but no person shall be prosecuted, punished 

or subjected to any penalty or forfeiture for or on account of any 

act, transaction, matter or thing concerning which he shall, under 

oath have testified or produced documentary evidence; provided, 

that no person so testifying shall be exempt from prosecution or 

punishment for any perjury committed by him in his testimony. 

Nothing herein contained shall be construed as in any manner giving 

to any public utility immunity of any kind. 

Certified Copies of Papers Filed to Be Evidence. 

Certified copies Sec. 56. (a) Copies of all official documents and orders filed 

of records or deposited according to law in the office of the commission, 

accepted as certified by a commissioner or by the secretary under the official 

' seal of the commission to be true copies of the originals, shall be 

evidence in like manner as the originals. 

Certified copies (b) Every order, authorization or certificate issued or approved 
of certain records by the commission under any provision of sections 38, 39, 40, 41, 

° rd %e* rlcordel 43, 5 °' 51 ° r 52 ° f to aCt sha11 be in Writin§ and entered ° n 
the records of the commission. Any such order, authorization or 

certificate, or a copy thereof, or a copy of the record of any such 

order, authorization or certificate, certified by a commissioner or by 

the secretary under the official seal of the commission to be a true 

copy of the original order, authorization, certificate or entry, may be 

recorded in the office of the recorder of any county, or city and 

county, in which is located the principal place of business of any 

public utility affected thereby, or in which is situated any property 



PU BLIC UTILITIES ACT 223 

of any such public utility, and such record shall impart notice of 
its provisions to all persons. A certificate under the seal of the 
commission that any such order, authorization or certificate has 
not been modified, stayed, suspended or revoked may also be 
recorded in the same offices in the same manner and with like effect. 

Fees. 

Sec. 5 7. The commission shall charge and collect the following p ees j or papers, 
fees: for copies of papers and records not required to be certified records, 
or otherwise authenticated by the commission, ten cents for each official 
folio; for certified copies of official documents and orders filed in 1Sf ,,. 

its office, fifteen cents for each folio and one dollar for every ytfjufa an j 
certificate under seal affixed thereto ; for certifying a copy of any reports of 
report made by a public utility, two dollars; for each certified copy Commission. 
of the annual report of the commission, one dollar and fifty cents; 
for certified copies of evidence and proceedings before the commis- 
sion, fifteen cents for each folio; for certificate authorizing an issue 
of bonds, notes or other evidences of indebtedness, one dollar for 
each thousand dollars of the face value of the authorized issue or 
fraction thereof up to one million dollars, and fifty cents for each p ees on s f 0C L 
one thousand dollars over one million dollars and up to ten million or bond issues, 
dollars, and twenty-five cents for each one thousand dollars over 
ten million dollars, with a minimum fee in any case of two hundred 
and fifty dollars; provided, that no fee shall be required when such 
issue is made for the purpose of guaranteeing, taking over, refunding, 
discharging or retiring any bond, note or other evidence of indebted- 
ness up to the amount of the issue guaranteed, taken over, refunded, 
discharged or retired. No fees shall be charged or collected for 
copies of papers, records or official documents, furnished to public 
officers for use in their official capacity, or for the annual reports 
of the commission in the ordinary course of distribution, but the 
commission may fix reasonable charges for publications issued under All fees paid 
its authority. All fees charged and collected under this section shall ™ io ^ taie 

be paid, at least once each week, accompanied by a detailed 

i r • i f ^ i ,. credit of 

statement thereot, into the treasury of the state to the credit of a "Railroad 

fund to be known as the "Railroad Commission Fund," which fund Commission 

is hereby created. Fund.** 



224 LOUIS SLOSS & CO. 



Inspection of Books, Papers and Documents. 

Commission to Sec. 58. The commission, each commissioner and each officer 

have free access and person employed by the commission shall have the right, at any 

J ec °lf. s and all times, to inspect the accounts, books, papers and documents 

utilities °^ any P u ^^ c utmtv » an ^ tne commission, each commissioner and 

any officer of the commission or any employee authorized to 

administer oaths shall have power to examine under oath any officer, 

agent or employee of such public utility in relation to the business 

and affairs of said public utility; provided, that any person other 

than a commissioner or an officer of the commission demanding such 

inspection shall produce under the hand and seal of the commission 

his authority to make such inspection; and provided further, that a 

written record of the testimony or statement so given under oath 

shall be made and filed with the commission. 



Production of Books and Records Kept Outside the 

State. 

Commission Sec. 59. The commission may require, by order served on any 

may require public utility in the manner provided herein for the service of orders,' 

records t?ept out ^ e production within this state at such time and place as it may 

i i designate, of any books, accounts, papers or records kept by said 

public utility in any office or place without this state, or, at its 

option, verified copies in lieu thereof, so that an examination thereof 

may be made by the commission or under its direction. 

Complaints. 

Filing of com- Sec. 60. Complaint may be made by the commission of its own 

plaints against mo tion or by any corporation or person, chamber of commerce, board 

'' of trade, or any civic, commercial, mercantile, traffic, agricultural 

or manufacturing association or organization or any body politic or 

municipal corporation, by petition or complaint in writing, setting 

forth any act or thing done or omitted to be done by any public 

Method of utility including any rule, regulation or charge heretofore established 

handling by or nxec } by or f or anv public utility, in violation, or claimed to be 

* in violation, of any provision of law or of any order or rule of the 

commission; provided, that no complaint shall be entertained by the 



PUBLIC UTILITIES ACT 225 

commission, except upon its own motion, as to the reasonableness 
of any rates or charges of any gas, electrical, water or telephone 
corporation, unless the same be signed by the mayor or the president 
or chairman of the board of trustees or a majority of the council, 
commission, or other legislative body of the city and county, or city 
or town, if any, within which the alleged violation occurred, or not 
less than twenty-five consumers or purchasers or prospective con- 
sumers or purchasers, of such gas, electricity, water or telephone 
service. All matters upon which complaint may be founded may 
be joined in one hearing, and no motion shall be entertained against 
a complaint for misjoinder of causes of action or grievances or 
misjoinder or nonjoinder of parties; and in any review by the courts 
of orders or decisions of the commission the same rule shall apply 
with regard to the joinder of causes and parties as herein provided. 
The commission shall not be required to dismiss any complaint 
because of the absence of direct damage to the complainant. Upon Q oto y. f 
the filing of a complaint, the commission shall cause a copy thereof complaint 
to be served upon the corporation or person complained of. Service served on 
in all hearings, investigations and proceedings pending before the a "eged offender. 
commission may be made upon any person upon whom a summons 
may be served in accordance with the provisions of the Code of 
Civil Procedure of this state, and may be made personally or by 
mailing in a sealed envelope, registered, with postage prepaid. The 
commission shall fix the time when and place where a hearing will 
be had upon the complaint and shall serve notice thereof, not less 
than ten days before the time set for such hearing, unless the 
commission shall find that public necessity requires that such hearing 
be held at an earlier date. 

Hearings, Orders and Record: Recovery on Decision. 

Sec. 61. (a) At the time fixed for any hearing before the Defendant 

commission or a commissioner, or the time to which the same may entitled to 

have been continued, the complainant and the corporation or person nearm 8- 
complained of, and such corporations or persons as the commission 
may allow to intervene, shall be entitled to be heard and to introduce 

evidence. The commission shall issue process to enforce the Witnesses may; 

attendance of all necessary witnesses. After the conclusion of the be subpoenaed. 



226 LOUIS SLOSS & CO. 

hearing, the commission shall make and file its order, containing its 

Decisions filed decision. A C <W of such order, certified under the seal of the 

and copy sent to commission, shall be served upon the corporation or person com- 

defendant. plained of, or his or its attorney. Said order shall, of its own 

Order effective f° rce » take effect and become operative twenty days after the service 

in twenty days, thereof, except as otherwise provided, and shall continue in force 

either for a period which may be designated therein or until changed 

or abrogated by the commission. If an order can not, in the 

judgment of the commission, be complied with within twenty days, 

Time ma\) he ^ e comm * ss i° n mav grant and prescribe such additional time as in 

extended. lis judgment is reasonably necessary to comply with the order, and 

may on application and for good cause shown, extend the time for 

Complete record compliance fixed in its order. A full and complete record of all 

of proceedings proceedings had before the commission or any commissioner on any 

shall be kept formal hearing had, and all testimony shall be taken down by a 

and become re p 0r t er appointed by the commission, and the parties shall be 

n entitled to be heard in person or by attorney. In case of an action 

Commission. . r . . * J . . . 

to review any order or decision of the commission, a transcript of 
such testimony, together with all exhibits or copies thereof introduced 
and all information secured by the commission on its own initiative 
and considered by it in rendering its order or decision, and of the 
Transcript pleadings, record and proceedings in the cause, shall constitute the 
on review, record of the commission; provided, that on review of an order or 
decision of the commission, the petitioner and the commission may 
stipulate that a certain question or questions alone and a specified 
portion only of the evidence shall be certified to the supreme court 
for its judgment, whereupon such stipulation and the question or 
questions and the evidence therein specified shall constitute the record 
on review. 

Public Utility May Complain. 

Complaints by Sec. 62. Any public utility shall have a right to complain on 
public utilities, any of the grounds upon which complaints are allowed to be filed 
by other parties, and the same procedure shall be adopted and 
followed as in other cases, except that the complaint may be heard 
ex parte by the commission or may be served upon any parties 
designated by the commission. 



PUBLIC UTILITIES ACT 227 



Increases in Rates. 

Sec. 63. (a) No public utility shall raise any rate, fare, toll, Rates may not 

rental or charge or so alter any classification, contract, practice, rule be raised except 

or regulation as to result in an increase in any rate, fare, toll, rental ^ order of 
,i i . . Commission. 

or charge, under any circumstances whatsoever, except upon a 

showing before the commission and a finding by the commission 

that such increase is justified. 

(b) Whenever there shall be filed with the commission any Commission 

schedule stating an individual or joint rate, fare, toll, rental, charge, may suspend 

classification, contract, practice, rule or regulation, not increasing or scneaules no * 

, . . . r . .I . i i .i showing increase. 

resulting in an increase in any rate, rare, toll, rental or charge, the 

commission shall have power, and it is hereby given authority, either 
upon complaint or upon its own initiative without complaint, at once, 
and if it so orders, without answer or other formal pleadings by 
the interested public utility or utilities, but upon reasonable notice, 
to enter upon a hearing concerning the propriety of such rate, fare, 
toll, rental, charge, classification, contract, practice, rule or regulation, 
and pending the hearing and the decision thereon such rate, fare, 
toll, rental, charge, classification, contract, practice, rule or regula- 
tion shall not go into effect ; provided, that the period of suspension Orders of 
of such rate, fare, toll, rental, charge, classification, contract, suspension 
practice, rule or regulation shall not extend beyond one hundred should not be 
and twenty days beyond the time when such rate, fare, toll, rental, c 
charge, classification, contract, practice, rule or regulation would 
otherwise go into effect unless the commission, in its discretion, 
extends the period of suspension for a further period not exceeding Tj n i ess extended 
six months. On such hearing the commission shall establish the no f over s { x 
rates, fares, tolls, rentals, charges, classifications, contracts, practices, months. 
rules or regulations proposed, in whole or in part, or others in lieu 
thereof, which it shall find to be just and reasonable. All such 
rates, fares, tolls, rentals, charges, classifications, contracts, practices, 
rules or regulations not so suspended shall, on the expiration of thirty Otherwise to go 
days from the time of filing the same with the commission, or of into effect in 
such lesser time as the commission may grant, go into effect and thirty days. 
be the established and effective rates, fares, tolls, rentals, charges, 
classifications, contracts, practices, rules and regulations, subject to 
the power of the commission, after a hearing had on its own motion 
or upon complaint, as herein provided, to alter or modif 



228 LOUIS SLOSS & CO. 



Commission May Change Orders and Decisions. 

Orders changed Sec. 64. The commission may at any time, upon notice to the 
b\f Commission public utility affected, and after opportunity to be heard as provided 
a e etfec oj j n ^ e case f complaints, rescind, alter or amend any order or 
decision made by it. Any order rescinding, altering or amending 
a prior order or decision shall, when served upon the public utility 
affected, have the same effect as is herein provided for original 
orders or decisions. 

Orders and Decisions Conclusive in Collateral 
Proceedings. 

Orders con- Sec. 65. In all collateral actions or proceedings, the orders 
elusive in col- anc J decisions of the commission which have become final shall be 
lateral pro- conclusive . 
ceedings. 

Rehearings. 

Applications for Sec. 66. After any order or decision has been made by the 
re-heanngs. commission, any party to the action or proceeding, or any stock- 
holder or bondholder or other party pecuniarily interested in the 
public utility affected, may apply for a rehearing in respect to any 
matters determined in said action or proceeding and specified in the 
application for rehearing, and the commission may grant and hold 
such rehearing on said matters, if in its judgment sufficient reason 
No cause for therefor be made to appear. No cause of action arising out of 
b.on until anv orc } er or decision of the commission shall accrue in any court 

' . , to any corporation or person unless such corporation or person shall 

for re-hear mg. . . . f . „. . . r ., . , .. 

have made, before the effective date or said order or decision, 

application to the commission for a rehearing. Such application 

shall set forth specifically the ground or grounds on which the 

applicant considers said decision or order to be unlawful. No 

Grounds must corporation or person shall in any court urge or rely on any ground 

be set forth in not so set forth in said application. Any application for a rehearing 

> or made ten days or more before the effective date of the order as 

to which a rehearing is sought, shall be either granted or denied 

before such effective date, or the order shall stand suspended until 

such application is granted or denied. Any application for a 

rehearing made within less than ten days before the effective date 



PUBLIC UTILITIES ACT 



229 



of the order as to which a rehearing is sought, and not granted 
within twenty days, may be taken by the party making the 
application to be denied, unless the effective date of the order is 
extended for the period of the pendency of the application. If any 
application for a rehearing be granted without a suspension of the 
order involved, the commission shall forthwith proceed to hear the 
matter wiih all despatch and shall determine the same within twenty 
days after final submission, and if such determination is not made 
within said time, it may be taken by any party to the rehearing 
that the order involved is affirmed. An application for rehearing 
shall not excuse any corporation or person from complying with and 
obeying any order or decision, or any requirement of any order 
or decision of the commission theretofore made, or operate in any 
manner to stay or postpone the enforcement thereof, except in such 
cases and upon such terms as the commission may by order direct. 
If, after such rehearing and a consideration of all the facts, including 
those arising since the making of the order or decision, the commission 
shall be of the opinion that the original order or decision or any 
part thereof is in any respect unjust or unwarranted, or should be 
changed, the commission may abrogate, change or modify the same. 
An order or decision made after such rehearing abrogating, changing 
or modifying the original order or decision shall have the same force 
and effect as an original order or decision, but shall not affect any 
right or the enforcement of any right arising from or by virtue of 
the original order or decision unless so ordered by the commission. 



Orders of 
Commission 
must be obeyed 
pending 
re-hearing 
except. . . 

Commission may 
modify orders. 



Review. 

Sec. 67. Within thirty days after the application for a 
rehearing is denied, or, if the application is granted, then within 
thirty days after the rendition of the decision on rehearing, the 
applicant may apply to the supreme court of this state for a writ 
of certiorari or review (hereinafter referred to as a writ of review) 
for the purpose of having the lawfulness of the original order or 
decision or the order or decision on rehearing inquired into and 
determined. Such writ shall be made returnable not later than 
thirty days after the date of the issuance thereof, and shall direct 
the commission to certify its record in the case to the court. On 
the return day, the cause shall be heard by the supreme court, unless 



Supreme Court 
may review. 



230 LOUIS SLOSS & CO. 



No new or for a good reason shown the same be continued. No new or 

additional additional evidence may be introduced in the supreme court, but 

evidence may ^ cause sna u ^ e nearc [ on the record of the commission as certified 

in the to ^ *** ^ ne rev ^ ew sna U not De extended further than to determine 

Supreme Court, whether the commission has regularly pursued its authority, including 

a determination of whether the order or decision under review 

violates any right of the petitioner under the constitution of the 

Findings of United States or of the State of California. The findings and 

n conclusions of the commission on questions of fact shall be final 

x jf. n I an d shall not be subject to review; such questions of fact shall 

include ultimate facts and the findings and conclusions of the 

commission on reasonableness and discrimination. The commission 

and each party to the action or proceeding before the commission 

shall have the right to appear in the review proceeding. Upon the 

hearing the supreme court shall enter judgment either affirming or 

setting aside the order or decision of the commission. The provisions 

of the code of civil procedure of this state relating to writs of 

review shall, so far as applicable and not in conflict with the 

provisions of this act, apply to proceedings instituted in the supreme 

No other court under the provisions of this section. No court of this state 

courts of State (except the supreme court to the extent herein specified) shall have 

e jurisdiction to review, reverse, correct or annul any order or decision 

of the commission or to suspend or delay the execution or operation 

thereof, or to enjoin, restrain or interfere with the commission in 

the performance of its official duties; provided, that the writ of 

mandamus shall lie from the supreme court to the commission in all 

proper cases. 

Suspension of Commission's Orders. 

Supreme Court Sec. 68. (a) The pendency of a writ of review shall not of 
may suspend { tse jf stav or SUS p e nd the operation of the order or decision of the 

ssl ? n s commission, but during the pendency of such writ, the supreme court 
orders. ..... or- , . , , . , 

m its discretion may stay or suspend, in whole or in part, the 

operation of the commission's order or decision. 

(b) No order so staying or suspending an order or decision 

J , • „ <;.„ „„A of the commission shall be made by the supreme court otherwise 
days notice and . 

after hearing. tnan u P on d\* ee days' notice and after hearing, and if the order 



PUBLIC UTILITIES ACT 23J 

or decision of the commission is suspended, the order suspending the 
same shall contain a specific finding based upon evidence submitted 
to the court and identified by reference thereto, that great or 
irreparable damage would otherwise result to the petitioner and 
specifying the nature of the damage. 

(c) In case the order or decision of the commission is stayed S ^ e ?fffJ 0nd 
or suspended, the order of the court shall not become effective until 
a suspending bond shall first have been executed and filed with, 
and approved by the commission (or approved, on review, by the 
supreme court), payable to the people of the State of California, 
and sufficient in amount and security to insure the prompt payment, 
by the party petitioning for the review, of all damages caused by L)amages. 
the delay in the enforcement of the order or decision of the 
commission, and of all moneys which any person or corporation may 
be compelled to pay, pending the review proceedings, for transpor- 
tation, transmission, product, commodity or service in excess of the 
charges fixed by the order or decision of the commission, in case 

said order or decision is sustained. The supreme court, in case *"° 

, . j , . . , . ... in excess of rates 

it stays or suspends the order or decision or the commission in any .7 • » ? 

matter affecting rates, fares, tolls, rentals, charges or classifications, Commission 

shall also by order direct the public utility affected to pay into court, shall be 

from time to time, there to be impounded until the final decision of impounded 

the case, or into some bank or trust company paying interest on P en " m £ 

deposits, under such conditions as the court may prescribe, all sums y,- .- 

of money which it may collect from any corporation or person in 

excess of the sum such corporation or person would have been 

compelled to pay if the order or decision of the commission had 

not been stayed or suspended. 

(J) In case the supreme court stays or suspends any order or Public utility 

decision lowering any rate, fare, toll, rental, charge or classification, L 
, . . , . , 1 r • 1 v accurate account 

the commission, upon the execution and approval or said suspending Q x excess 

bond, shall forthwith require the public utility affected, under charges collected 

penalty of the immediate enforcement of the order or decision of pending 

the commission (pending the review and notwithstanding the sus- se^/emen/ of 

pending order), to keep such accounts, verified by oath, as may, 

in the judgment of the commission, suffice to show the amounts 

being charged or received by such public utility, pending the review, 



232 LOUIS SLOSS & CO. 

in excess of the charges allowed by the order or decision of the 
commission, together with the names and addresses of the corpora- 
tions or persons to whom overcharges will be refundable in case 
the charges made by the public utility, pending the review, be not 
sustained by the supreme court. The court may, from time to 
time, require said party petitioning for a review to give additional 
security on, or to increase the said suspending bond, whenever in 
the opinion of the court the same may be necessary to insure the 
Impounded prompt payment of said damages and said overcharges. Upon the 
money to be nna l decision by the supreme court, all moneys which the public 
utility may have collected, pending the appeal in excess of those 
entitled thereto autno " ze< ^ ky such final decision, together with interest, in case the 
court ordered the deposit of such moneys in a bank or trust 
company, shall be promptly paid to the corporations or persons 
entitled thereto, in such manner and through such methods of 
Method of distribution as may be prescribed by the commission. If any such 
payment moneys shall not have been claimed by the corporations or persons 

prescribe y entitled thereto within one year from the final decision of the 
Commission. , ■••in i 

supreme court, the commission shall cause notice to such corporations 

or persons to be given by publication, once a week for two 

successive weeks, in a newspaper of general circulation, printed and 

published in the city and county of San Francisco, and such other 

newspaper or newspapers as may be designated by the commission, 

said notice to state the names of the corporations or persons entitled 

to such moneys and the amount due each corporation or person. 

All moneys not claimed within three months after the publication 

of said notice shall be paid by the public utility, under the direction 

of the commission, into the state treasury for the benefit of the 

general fund. 

Court Proceedings: Preference. 

Preference to Sec. 69. All actions and proceedings under this act, and all 
Commission actions or proceedings to which the commission or the people of the 

cases in court. State of California may be parties, and in which any question 
arises under this act, or under or concerning any order or decision 
of the commission, shall be preferred over all other civil causes 
except election causes and shall be heard and determined in prefer- 



PUBLIC UTILITIES ACT 



233 



ence to all other civil business except election causes, irrespective 
of position on the calendar. The same preference shall be granted 
upon application of the attorney of the commission in any action 
or proceeding in which he may be allowed to intervene. 



Physical Valuation: Procedure. 

Sec. 70. For the purpose of ascertaining the matters and things 
specified in section forty-seven of this act, concerning the value of 
the property of public utilities, the commission may cause a hearing 
or hearings to be held at such time or times and place or places 
as the commission may designate. Before any hearing is had, the 
commission shall give the public utility affected thereby at least 
thirty days' written notice, specifying the time and place of such 
hearing, and such notice shall be sufficient to authorize the com- 
mission to inquire into the matters designated in this section and 
in said section forty-seven of this act, but this provision shall not 
prevent the commission from making any preliminary examination 
or investigation into the matters herein referred to, or from inquiring 
into such matters in any other investigation or hearing. All public 
utilities affected shall be entitled to be heard and to introduce 
evidence at such hearing or hearings. The commission is empowered 
to resort to any other source of information available. The evidence 
introduced at such hearing shall be reduced to writing and certified 
under the seal of the commission. The commission shall make and 
file its findings of fact in writing upon all matters concerning which 
evidence shall have been introduced before it which in its judgment 
have bearing on the value of the property of the public utility 
affected. Such findings shall be subject to review by the supreme 
court of this state in the same manner and within the same time 
as other orders and decisions of the commission. The findings of 
the commission so made and filed, when properly certified under 
the seal of the commission, shall be admissible in evidence in any 
action, proceeding or hearing before the commission or any court, 
in which the commission, the state or any officer, department or 
institution thereof, or any county, city and county, municipality or 
other body politic and the public utility affected may be interested 
whether arising under the provisions of this act or otherwise, and 



Hearings by 
Commission to 
ascertain 
physical 
valuation of 
public utilities. 



Preliminary 
examination. 

Evidence. 



Finding subject 
to review by 
Supreme Court. 



Findings of 
Commission 
admissable as 
evidence in any 
action. 



234 LOUIS SLOSS & CO. 

such findings, when so introduced, shall be conclusive evidence of 
the facts therein stated as of the date therein stated under conditions 
then existing, and such facts can only be controverted by showing 
a subsequent change in conditions bearing upon the facts therein 
Further determined. The commission may from time to time cause further 
hearings, hearings and investigations to be had for the purpose of making 
revaluations or ascertaining the value of any betterments, improve- 
ments, additions or extensions made by any public utility subsequent 
to any prior hearing or investigation, and may examine into all 
matters which may change, modify or affect any finding of fact 
previously made, and may at such time make findings of fact 
supplementary to those theretofore made. Such hearings shall be 
had upon the same notice and be conducted in the same manner, 
and the findings so made shall have the same force and effect as 
is provided herein for such original notice, hearing and findings; 
provided, that such findings made at such supplemental hearings 
or investigations shall be considered in connection with and as a 
part of the original findings except in so far as such supplemental 
findings shall change or modify the findings made at the original 
hearing or investigation. 

Excessive or Discriminatory Charges: Reparation. 

Refunds of Sec. 71. (a) When complaint has been made to the com- 
r mission concerning any rate, fare, toll, rental or charge for any 
, product or commodity furnished or service performed by any public 

utility, and the commission has found, after investigation, that the 
public utility has charged an excessive or discriminatory amount for 
such product, commodity or service, the commission may order that 
the public utility make due reparation to the complainant therefor, 
with interest from the date of collection; provided, no discrimination 
will result from such reparation. 

Suits to (£) If the public utility does not comply with the order for 

* the payment of reparation within the time specified in such order, 

~ T . suit may be instituted in any court of competent jurisdiction to 
Complaints . A „ , . K . . .. 

must be Hied recover tne same - All complaints concerning excessive or discrim- 

rvithin tivo inatory charges shall be filed with the commission within two years 

years, from the time the cause of action accrues, and the petition for the 



PUBLIC UTILITIES ACT 255 

enforcement of the order shall be filed in the court within one year 
from the date of the order of the commission. The remedy in this 
section provided shall be cumulative and in addition to any other 
remedy or remedies in this act provided in case of failure of a 
public utility to obey an order or decision of the commission. 

Commission Shall Enforce Laws. 

Sec. 72. It is hereby made the duty of the commission to see Commission 
that the provisions of the constitution and statutes of this state ma V sue m 
affecting public utilities, the enforcement of which is not specifically n ' 
vested in some other officer or tribunal, are enforced and obeyed, 
and that violations thereof are promptly prosecuted and penalties 
due the state therefor recovered and collected, and to this end it 
may sue in the name of the people of the State of California. Upon 
the request of the commission, it shall be the duty of the attorney Public attorneys 
general or the district attorney of the proper county or city and ^ assist 
county to aid in any investigation, hearing or trial had under the 
provisions of this act, and to institute and prosecute actions or 
proceedings for the enforcement of the provisions of the constitution 
and statutes of this state affecting public utilities and fo»- th? 
punishment of all violations thereof. 

Public Utilities Liable for Damages. 

Sec. 73. (a) In case any public utility shall do, cause to Public utilities 
be done or permit to be done any act, matter or thing prohibited, ma ^ be sue , 
forbidden or declared to be unlawful, or shall omit to do any act, exemt) l arX) 
matter or thing required to be done, either by the constitution, any damages. 
law of this state or any order or decision of the commission, such 
public utility shall be liable to the persons or corporations affected 
thereby for all loss, damages or injury caused thereby or resulting 
therefrom, and if the court shall find that the act or omission was 
wilful, the court may in addition to the actual damages award 
damages for the sake of example and by way of punishment. An 
action to recover for such loss, damage or injury may be brought in 
any court of competent jurisdiction by any corporation or person. 



236 LOUIS SLOSS & CO. 



(b) No recovery as in this section provided shall in any manner 
affect a recovery by the state of the penalties in this act provided 
or the exercise by the commission of its power to punish for contempt. 

Effect of Act on Release of Damages: Penalties 
Cumulative. 

This act does Sec. 74. (a) This act shall not have the effect to release or 
ot eff ect existing wa j ve any r j gnt Q f act i on by the state, the commission, or any person 
rights of action. , . , . f f . , . . , 

or corporation ror any right, penalty or rorreiture which may have 

arisen or accrued or may hereafter arise or accrue under any law 
of this state. 

Penalties under (b) All penalties accruing under this act shall be cumulative 

this act f eacn other, and a suit for the recovery of one penalty shall not 

» 7 be a bar to or affect the recovery of any other penalty or forfeiture 

prosecution or ^ e a ^ ar t0 any crnTima l prosecution against any public utility, 

or any officer, director, agent or employee thereof, or any other 

corporation or person, or be a bar to the exercise by the commission 

of its power to punish for contempt. 

Summary Proceedings. 

Commission Sec. 75. Whenever the commission shall be of the opinion that 

shall act in the an y public utility is failing or omitting or about to fail or omit, 

name of h e to j Q an ything required of it by law, or by any order, decision, 

laws azainsi ru ^ e ' ^^ rec ^ on or requirement of the commission, or is doing anything 

public utilities. or aD out to do anything, or permitting anything or about to permit 

anything to be done, contrary to or in violation of law, or of any 

order, decision, rule, direction or requirement of the commission, it 

shall direct the attorney of the commission to commence an action 

or proceeding in the superior court in and for the county, or city 

and county, in which the cause or some part thereof arose, or in 

which the corporation complained of, if any, has its principal place 

of business, or in which the person, if any, complained of, resides, 

in the name of the people of the State of California, for the purpose 

of having such violations or threatened violations stopped and 

prevented, either by mandamus or injunction. The attorney of the 

commission shall thereupon begin such action or proceeding by 



PUBLIC UTILITIES ACT 237 



petition to such superior court, alleging the violation or threatened 

violation complained of, and praying for appropriate relief by way 

of mandamus or injunction. It shall thereupon be the duty of the Court to set lime 

court to specify a time, not exceeding twenty days after the service , " U days 

. , -• , • • . i • i • i l II- -i- i • i of complaint. 

or the copy or the petition, within which the public utility complained 

of must answer the petition, and in the mean time said public utility 

may be restrained. In case of default in answer, or after answer, 

the court shall immediately inquire into the facts and circumstances 

of the case. Such corporations or persons as the court may deem 

necessary or proper to be joined as parties, in order to make its 

judgment, order or writ effective, may be joined as parties. The 

final judgment in any such action or proceeding shall either dismiss 

the action of proceeding or direct that the writ of mandamus or 

injunction issue or be made permanent as prayed for in the petition, 

or in such modified or other form as will afford appropriate relief. 

An appeal may be taken to the supreme court from such final Appeals may 

judgment in the same manner and with the same effect, subject ~ e ca ^ ie dto 

to the provisions of this act, as appeals are taken from judgments 

of the superior court in other actions for mandamus or injunction. 

Penalties, Violations by Public Utilities. 

Sec. 76. (a) Any public utility which violates or fails to Public utilities 
comply with any provision of the constitution of this state or of ma V be fined. 
this act, or which fails, omits or neglects to obey, observe or comply 
with any order, decision, decree, rule, direction, demand or require- 
ment or any part or provision thereof, of the commission, in a case 
in which a penalty has not hereinbefore been provided for such 
public utility, is subject to a penalty of not less than five hundred 
dollars nor more than two thousand dollars for each and every 
offense. 

(b) Every violation of the provisions of this act or of any order, Every violation 

decision, decree, rule, direction, demand or requirement of the of this act a 

commission, or any part or portion thereof by any corporation or se P ara ^ e offense. 

person is a separate and distinct offense, and in case of a continuing Each day*s 

violation each day's continuance thereof shall be and be deemed to violation a 

be a separate and distinct offense. separate offense. 



238 LOUIS SLOSS & CO. 



Public utility ( c ) J n construing and enforcing the provisions of this act 

responsible for relating to penalties, the act, omission or failure of any officer, agent 

action of or employee of any public utility, acting within the scope of his 

\ a ^ ] official duties or employment, shall in every case be and be deemed 
or employees. . . , ., f . ... .,. 

to be the act, omission or failure or such public utility. 

Penalties, Violations by Officers, Agents or Employees 
of Public Utilities. 

Officers agents Sec. 77. Every officer, agent or employee of any public utility, 

or employees of who violates or fails to comply with, or who procures, aids or 

public utilities abets any violation by any public utility of any provision of the 

may be fined or constitution of this state or of this act, or who fails to obey, 

e ,* d1 observe or comply with any order, decision, rule, direction, demand 
both. . 

or requirement or any part or provision thereof, or the commission, 

or who procures, aids or abets any public utility in its failure to 

obey, observe and comply with any such order, decision, rule, 

direction, demand or requirement, or any part or provision thereof 

in a case in which a penalty has not hereinbefore been provided 

for such officer, agent or employee, is guilty of a misdemeanor and 

is punishable by a fine not exceeding one thousand dollars, or by 

imprisonment in a county jail not exceeding one year, or by both 

such fine and imprisonment. 

Penalties, Violations by Corporations Other Than 
Public Utilities. 

Fines for cortoora- S £C - 78. Every corporation, other than a public utility, which 
irons other than violates any provision of this act, or which fails to obey, observe 
public utilities, or comply with any order, decision, rule, direction, demand or 
requirement, or any part or provision thereof, of the commission, 
in a case in which a penalty has not hereinbefore been provided 
for such corporation, is subject to a penalty of not less than five 
hundred dollars nor more than two thousand dollars for each and 
every offense. 



PUBLIC UTILITIES ACT 239 

Penalties, Violations by Persons Other Than Officers, 
etc., of Public Utilities. 

Sec. 79. Every person who, either individually, or acting as Individuals not 

an officer, agent or employee of a corporation other than a public officers, etc., of 

utility, violates any provision of this act, or fails to observe, obey P UD "C utilities 

or comply with any order, decision, rule, direction, demand or ^ • j 

. . . or imprisoned, 

requirement, or any part or portion thereof, of the commission, or or }j ih t 

who procures, aids or abets any such public utility in its violation 
of this act, or in its failure to obey, observe or comply with any 
such order, decision, rule, direction, demand or requirement, or any 
part or portion thereof, in a case in which a penalty has not herein- 
before been provided for such person, is guilty of a misdemeanor, 
and is punishable by a fine not exceeding one thousand dollars, or 
by imprisonment in a county jail not exceeding one year, or by both 
such fine and imprisonment. 

Suits for Penalties. 

Sec. 80. Actions to recover penalties under this act shall be Suits for 
brought in the name of the people of the State of California, in penalties map be 
the superior court in and for the county, or city and county, in brought m 
which the cause or some part thereof arose, or in which the ^ 
corporation complained of, if any, has its principal place of business, 
or in which the person, if any, complained of, resides. Such action 
shall be commenced and prosecuted to final judgment by the 
attorney of the commission. In any such action, all penalties 
incurred up to the time of commencing the same may be sued for 
and recovered. In all such actions, the procedure and rules of 
evidence shall be the same as in ordinary civil actions, except as 
otherwise herein provided. All fines and penalties recovered by the 
state in any such action, together with the costs thereof, shall be 
paid into the state treasury to the credit of the general fund. Any 
such action may be compromised or discontinued on application of 
the commission upon such terms as the court shall approve and order. 

Contempt Proceedings. Punishment for 

contempt same 
Sec. 81. Every public utility, corporation or person which shall as in courts of 

fail to observe, obey or comply with any order, decision, rule, record. 



240 LOUIS SLOSS & CO. 

regulation, direction, demand or requirement, or any part or portion 
thereof, of the commission or any commissioner shall be in contempt 
of the commission, and shall be punishable by the commission for 
contempt in the same manner and to the same extent as contempt 
is punished by courts of record. The remedy prescribed in this 
section shall not be a bar to or affect any other remedy prescribed 

Punishment in this act, but shall be cumulative and in addition to such other 

cumulative, remedy or remedies. 

ARTICLE V. 

CONSTRUCTION: SAVING CLAUSE: APPROPRIA- 
TION: REPEAL. 

Effect of Act of Existing Powers of Any City and 
County, or Incorporated City or Town. 

Municipalities Sec. 82. This act shall not affect such powers of control over 

may retain any public utility vested in any city and county or incorporated 

ntroi of public c j ty or town as> at an election to be held pursuant to laws to be 

j l hereafter passed by the legislature, a majority of the qualified 

control or re-invest electors voting thereon of such city and county, or incorporated 

themselves city or town, shall vote to retain, and until such election such 

with it. powers shall continue unimpaired in such city and county or 

incorporated city or town; but if the vote so taken shall not favor 

the continuation of such powers, they shall thereafter vest in the 

commission; provided, that where any such city and county or 

incorporated city or town shall have elected to continue any powers 

respecting public utilities, it may, by a vote of a majority of its 

qualified electors voting thereon, thereafter surrender such powers 

to the commission in the manner to be prescribed by the legislature; 

or if such municipal corporation shall have surrendered any powers 

to the commission, it may, by like vote, thereafter reinvest itself 

with such power. 

Effect of Act on Pending Actions and Proceedings. 

Act does not __ __ . ... 

affect pending 3EC. oJ. (a) 1 his act shall not afreet pending actions or 

actions of proceedings brought by or against the people of the State of 

Commission. California or the commission, or by any other person or corporation 



PUBLIC UTILITIES ACT 241 

under the provisions of chapters 20 or 386 of the laws of 1911, 
but the same may be prosecuted and defended with the same effect 
as though this act had not been passed. Any investigation, hearing, 
or examination undertaken, commenced, instituted or prosecuted prior 
to the taking effect of this act may be conducted and continued 
to a final determination in the same manner and with the same 
effect as if it had been undertaken, commenced, instituted or prose- 
cuted in accordance with the provisions of this act. All proceedings All previous 
hitherto taken by the commission in any such investigation, hearing proceedings of 
or examination are hereby ratified, approved, validated and con- ^°™™ lss i° n 
firmed and all such proceedings shall have the same force and 
effect as if they had been undertaken, commenced, instituted, and 
prosecuted under the provisions of this act and in the manner herein 
prescribed. 

(b) No cause of action arising under the provisions of chapters 
20 or 386 of the laws of 1911 shall abate by reason of the passage 
of this act, v/hether a suit or action has been instituted thereon at 
the time of the taking effect of this act or not, but actions may be 
brought upon such causes in the same manner, under the same 
terms and conditions, and with the same effect as though said 
chapters had not been repealed. 

(c) All orders, decisions, rules or regulations heretofore made, All previous 

issued or promulgated by the commission shall continue in force ^J" ers j °/ i 

and have the same effect as though they had been lawfully made, L u 

i i ! i . - f i . s " a " continue 

issued or promulgated under the provisions of this act. , n / orce# 

(d) This act, in so far as it embraces the same subject matter, This act 
shall be construed as a continuation of chapter 20 of the laws of continuance of 
191 1. approved February 10, 191 1, and chapter 386 of the laws ^ ha P- 20 j QJt 
of 1911, approved April 6, 1911. Laws of 1911. 

Constitutionality. 

Sec. 84. If any section, subsection, sentence, clause or phrase Unconstitution- 
al this act is for any reason held to be unconstitutional, such cdity of part of 
decision shall not affect the validity of the remaining portions of aci " oes " 01 
this act. The legislature hereby declares that it would have passed 
this act, and each section, subsection, sentence, clause and phrase 
thereof, irrespective of the fact that any one or more other sections, 
subsections, sentences, clauses or phrases be declared unconstitutional. 



242 LOUIS SLOSS & CO. 



Interstate Commerce. 

Act does not Sec. 85. Neither this act nor any provision thereof, except 

apply to foreign when specifically so stated, shall apply or be construed to apply 

e to commerce with foreign nations or commerce among the several 

commerce r , . , , , . 

. states or this union, except in so rar as the same may be permitted 

CX.C&JJ L CIS 

permitted. un ^ er tne provisions of the constitution of the United States and 
the Acts of Congress. 

Appropriation. 

Appropriation Sec. 86. All moneys which are paid into the state treasury by 
of fees collected the commission up to and including the thirtieth day of June, 1913, 
b$ Commission. unc j er t ^ e prov j s j ons f sec tion 57 of this act, and credited to the 
Railroad Commission Fund, are hereby appropriated, to be used 
by the commission in carrying out the provisions of this act, and 
the controller is hereby directed to draw his warrant on said fund 
from time to time in favor of the commission for the amounts 
expended under its direction, and the treasurer is hereby authorized 
and directed to pay the same. 

Repeal. 

Repeal of acts Sec. 87. The railroad commission act, approved February 1 0, 
in conflict. |91 I, and the act entitled "An act to amend the railroad commis- 
sion act by amending section fifteen thereof relating to powers and 
duties of the railroad commission of the State of California, and 
to amend section thirty-seven thereof relating to free and reduced- 
rate transportation for freight and passengers,'* approved April 6, 
1911, and all acts or parts of acts inconsistent with the provisions 
of this act, are hereby repealed. 

Time of Effect. 
Public Utility aa ' . ■ . . , 

Act takes effect ^EC. ""■ * nis act sna " ta * e e " ect ninety days after the nnal 
March23, 1912. adjournment of this session of the legislature. 



Rules of Practice and Procedure 



Railroad Commission of the 
State of California. 



Adopted March 13, 1912. 
Effective March 23, 1912. 



The following rules of practice and procedure are adopted by the 
Railroad Commission of the State of California in accordance with 
the provisions of Section 53 of the Public Utilities Act: 

RULE I. 

Definitions. 

1 . The term "public utility," when used in these rules, includes Public Utility. 
every common carrier, pipe line corporation, gas corporation, 

electrical corporation, telephone corporation, telegraph corporation, 
water corporation, wharfinger and warehouseman, as those terms 
are defined in Section 2 of the Public Utilities Act. 

2. The term "Commission," when used in these rules, means Commission. 
the Railroad Commission of the State of California. 

3. The term "formal proceeding," when used in these rules, Formal 
means a proceeding which contemplates a hearing before the pfoceeaing. 
Commission or a commissioner sitting in a judicial or quasi-judicial 
capacity. A formal proceeding may be either (a) a complaint, or 

(b) an application. 

4. The term "complaint," when used in these rules, means a Complaint. 
formal proceeding, whether brought upon the Commission's own 

motion or upon complaint of a third party, having for its object 
the rendition of an order or decision which can be enforced by 
the Commission. 



244 ; __ LOUIS SLOSS & CO . 

Application. 5. The term "application," when used in these rules, means a 
formal proceeding brought by a public utility, for the purpose of 
securing the Commission's authorization or permission to perform 
an act. 

Financial 6. The term "financial condition," when used in these 

Condition. ru \ es w jth reference to an application, means the financial 

condition of the applicant as shown by a schedule or* 

schedules annexed to the petition and properly referred to 

therein, and showing: 

Stock- (a) Amount and kinds of stock authorized. 

(b) Amount and kinds of stock issued and outstanding. 

Preferred (c) Terms of preference of all preferred stock, whether 
Stock, cumulative or participating, or on dividends or assets, or 
otherwise. 

Mortgage. (J) Brief description of each mortgage upon property 
of the applicant, giving date of execution, name of mort- 
gagor, name of mortgagee or trustee, amount of indebted- 
ness authorized to be secured thereby and amount of indebt- 
edness actually secured. 

Bond issues. (e) Number and amount of bonds authorized and issued, 
giving name of the public utility which issued the same, 
describing each class separately, giving date of issue, par 
value, rate of interest, date of maturity and how secured. 

Other in- (/) Other indebtedness, giving same by classes and 
s ' describing security, if any, with a brief statement of the 
devolution or assumption of any portion of such indebted- 
ness upon or by any corporation or person, if the original 
liability has been transferred. 

Interest. (g) Amount of interest paid during previous fiscal year 
and rate thereof, with amount paid at each rate, if different 
rates were paid, upon each issue of indebtedness. 

Dividends. (h) Rate and amount of dividends paid during the five 
previous fiscal years and the amount of capital stock on 
which dividends were paid each year. 



RULES OF PRACTICE AND PROCEDURE. 245 

(i) Detailed statement of earnings and expenditures for Earning 
and balance sheet showing conditions at close of the last statements. 
fiscal year, unless already filed with the commission as part 
of the annual report, in which case a reference to the filing 
should be given. 

RULE II. 

Sessions of Commission. 

The office of the Commission shall be in San Francisco, Cali- Office in San 
fornia, and shall always be open, legal holidays and non-judicial Francisco. 
days excepted. The regular monthly session of the Commission 
shall be held in its office on the second Tuesday of every month, Regular 
at 10:30 A. M., at which time any person having business with meetings. 
the Commission may appear and be heard. The Commission will Sessions 
hold other sessions at San Francisco and elsewhere in the State elsewhere. 
of California at such times as it may designate. The sessions of Sessions 
the Commission shall be public. public. 

RULE III. 

Information. 

The Commission's secretary will, upon request, advise as to the s ecre i ar}} i a J 
form of complaint, petition, answer or other documents necessary v ' lse an j furnish 
to be filed in any formal proceeding, and furnish such information information to the 
from the files of the Commission as will conduce to a full presenta- public. 
tion of material facts. 

RULE IV. 

Formal Proceedings — General Matters Applicable 

to All. 

1 . All communications should be addressed to "Railroad Com- Communications 
mission of the State of California, San Francisco, California." to Commission. 

2. The secretary shall assign to each formal proceeding a num- Cases to 

ber which the parties shall, before filing, place on all subsequent be numbered. 
papers in such proceeding. 



246 LOUIS SLOSS & CO. 



Documents to 3. All pleadings filed with the Commission in formal proceed- 

be uniform, ings shall be printed or typewritten on one side of the paper only, 

and, as far as practicable, shall be upon paper 8J/2 x 1 3 inches in 

, size. Each line and page shall be numbered. 

pages numbered. 

Pleadings may 4. The Commission may, in its discretion, allow any pleading 

be amended, to be amended or corrected or any omission therein to be supplied. 

Commission 5. Subpoenas requiring the attendance of a witness from any 

may issue pl ace j n the state to any designated place of hearing for the purpose 

of taking the testimony of such witness orally, before the Commission 

or one or more commissioners may be issued by any commissioner 

or the secretary. 

Subpoenas for Subpoenas for the production of books, accounts, papers, way- 

productwn of ^jjj s anc j t ner documents (unless issued upon the Commission's 

own motion) will only be issued upon application in writing stating, 

as nearly as possible, the books, accounts, papers, waybills or other 

documents desired to be produced. 

Personal 6. Personal service of papers in all hearings, investigations and 

service, formal proceedings pending before the Commission may be made 

upon any person upon whom a summons may be served in accordance 

with the provisions of the Code of Civil Procedure of this state. 

Service by Service may also be made by mailing in a sealed envelope, registered, 

registered vvith postage prepaid, addressed to any party to such hearing, inves- 

" tigation or formal proceeding or to any person upon whom a 

summons may be served in accordance with the provisions of the 

Code of Civil Procedure. If service is by mailing, and an act 

is to be performed within a specified time after service, the time for 

the performance of the act shall begin to run at the time the 

Service upon registered letter is received. When any party has appeared by 

attorney, attorney, service upon the attorney will be deemed proper service 

upon such party. 

Orders, etc., 7. Each order, authorization or certificate made, issued or 

must be a pp r0 ved by the Commission shall be in writing and shall be filed 

1 ^' with or entered on the records of the Commission, in accordance 

Copy served w j m tne provisions of the Public Utilities Act, and a copy thereof, 

upon defendant. certified hy the secr etary under the seal of the Commission, shall 

be served upon or delivered to the corporation or person complained 

of, or the applicant, or his or its attorney. 



RULES OF PRACTICE AND PROCEDURE. £47 

8. In any formal proceeding, the Commission may permit Interested parties 
any corporation, association, body politic or person to intervene may intervene. 
and be heard, after opportunity has been given to the party or 
parties to such proceeding to be heard on such intervention. 
Leave thus granted shall entitle the intervenor to have notice of 
and to appear at the taking of testimony, to produce and cross- 
examine witnesses, and to be heard in person or by counsel on 
the argument. 

RULE V. 

Complaints — Contents and Proceedings Up to 
Hearing. 

1 . Complaint may be made by the Commission of its own Complaints shall 
motion or by any corporation or person, chamber of commerce, board be in writing. 

of trade, or any civic, commercial, mercantile, traffic, agricultural 
or manufacturing association or organization or any body politic or 
municipal corporation, by complaint in writing, setting forth any 
act or thing done or omitted to be done by any public utility in 
violation, or claimed to be in violation of any provision of law or 
of any order or rule of the Commission. 

(a) Any public utility shall have the right to complain on Public utilities 
any of the grounds upon which complaint may be made by other may complain. 
parties. 

2. Each complaint shall show the venue, "Before the Railroad Form of 
Commission of the State of California," shall bear a heading' complaints. 
showing the name of the complainant and the name of the defendant 

and shall state 

(a) The full name and post-office address of the complainant. 

(b) The full name and post-office address of the defendant. 

(c) Fully, clearly and with reasonable certainty the act or 
thing done or omitted to be done, of which complaint is made, 
with a reference, where possible, to the law, order or rule, and 
the section or sections thereof, of which a violation is claimed. 

(d) Such other matters or facts, if any, as may be necessary 
to acquaint the Commission fully with the details of the alleged 
violation. 



248 LOUIS SLOSS & CO. 

Hotv complaints 3. (a) The complaint shall be signed by the complainant or 
must be signed, his attorney, if any, and shall show the name and post-office address 
of such attorney and shall be verified. Complaints by unincorpor- 
ated associations may be verified by any officer or director thereof. 

Who must sign (b) Except upon its own motion, the Commission will entertain 

complaints as no CO mplaint as to the reasonableness of any rates or charges of 

. . " any gas, electrical, water or telephone corporation, other than a 
ness of rates. , . ,, . lf , , . . , » ' , 

complaint or the corporation ltselr, unless the same be signed by the 

mayor or the president or chairman of the board of trustees or a 

majority of the council, commission, cr other legislative body of 

the city and county, or city or town, if any, within which the 

alleged violation occurred, or not less than twenty-five consumers 

or purchasers or prospective consumers or purchasers of such gas, 

electricity, water or telephone service. 

Copies of 4. At the time complainant files his original complaint, he must 
Complaint. a \ so frj e copies thereof equal in number to one more than twice the 
number of corporations or persons to be served. 

Mailed to 5. Upon the filing of such complaint, the Commission shall 
defendants, immediately mail a copy thereof to the defendant or defendants 
and shall also examine the same to ascertain whether it establishes 
Answers to a prima facie case and conforms to those rules. At any time 
complaints. w ithin five days after the receipt by a defendant of such copy of 
such complaint, he may, in writing, call the Commission's attention 
to any defects therein, but this privilege shall not in any wise, unless 
the Commission specifically so orders, extend the time within which 
such defendant is required to satisfy the complaint or to answer. If 
the Commission is of the opinion that the complaint does not 
establish a prima facie case or does not conform to these rules, it 
shall notify the complainant or his attorney to that effect, and 
opportunity may be given to amend the complaint within a specified 
time. If the complaint is not so amended within such time or such 
extension thereof as the Commission, for good cause shown, may 
grant, it will be dismissed. 

If the Commission is of the opinion that such complaint, either 
as originally filed or as amended does establish a prima facie case 
and conform to these rules, the Commission shall serve upon each 
corporation or person complained of, an order under the hand 



RULES OF PRACTICE AND PROCEDURE. 249 

of its secretary and attested by its seal, accompanied by a copy 
of said complaint, directed to such corporation or person and 
requiring that the matter complained of be satisfied, or that the 
complaint be answered in writing within ten days from the date 
of service of such order, provided that the Commission may, in 
particular cases, require the answer to be filed within a shorter time. 

6. If the defendant desires to satisfy the complaint, he may Settlement with- 
submit to the Commission, within the time allowed for satisfaction out a hearing. 
or answer, a statement of the relief which he is willing to give. 

On the acceptance of this offer by the complainant and the approval 
of the Commission, no further proceedings need be taken. 

7. If satisfaction be not made as aforesaid, the corporation or Procedure when 
person complained of must, within the time specified in the order complaint is 

or such extension thereof as the Commission, for good cause shown, contested. 
may grant, file an answer to the complaint, with admission of service 
by complainant or his attorney endorsed thereon, or an affidavit of 
service. The answer must contain a specific denial of such material 
allegations of the complaint as are controverted by the defendant 
and also a statement of any new matter constituting a defense. If 
the answering party has no information or belief upon the subject 
sufficient to enable him to answer an allegation of the complaint, 
he may so state in his answer and place his denial upon that ground. 
The filing of an answer will not be deemed an admission of the 
sufficiency of the petition, but a motion to dismiss may be made 
at the hearing. 

RULE VI. 

Hearings and Rehearings — In All Formal Proceedings. 

1 . Except as otherwise determined in specific cases, the Com- Classes of cases 
mission will grant a hearing in the following classes of cases : entitled to a 

. x , vn , . , , . , hearing, 

{a) When an orcter to satisfy a complaint or to make answer 

thereto has been made and the corporation or person complained 

of has not satisfied the cause of complaint. (Rule V.) 

(b) When an application has been made in a formal pro- 
ceeding. 



250 _ LOUIS SLOSS & CO. 

Tenday 2. (a) Notice of the day and hour of a hearing shall be 
notice required. servec J a t least ten days before the time set therefor, unless the 
Commission shall find that public necessity requires the hearing to 
be held at an earlier date. Hearings shall be held in the office 
of the Commission in San Francisco unless elsewhere specified in 
the notice. 

Formal (b) In formal applications, the Commission may, in its 
applications, discretion, give all other corporations or persons who may be 
affected thereby an opportunity to be heard, either by service upon 
them of a copy of the petition or by publication of the substance 
thereof, at the expense of the applicant, for such length of time 
and in such newspaper or newspapers as the Commission may 
designate. In such cases, the form of the notice must be submitted 
to the secretary of the Commission for approval, and proof of the 
publication thereof must be filed with the secretary at or before 
the hearing. 

Agreements as 3. The parties to any proceeding or investigation before the 
to facts. Commission may, by stipulation in writing filed with the Commission 
or entered in the record, agree upon the facts or any portion thereof 
involved in the controversy, which stipulation shall be regarded 
and used as evidence at the hearing. It is desirable that the facts 
be thus agreed upon whenever practicable. The Commission may 
in such cases require such additional evidence as it may deem 
necessary. 

Examination 4. (a) Witnesses will be examined orally and under oath 
of witnesses, before the Commission or a commissioner unless the facts are 
stipulated or the Commission or commissioner otherwise orders. 

Complainant (b) The complainant must establish the facts upon which he 
must establish bases his complaint, unless the defendant admits the same or fails 
J * to answer the complaint. The defendant must likewise give evidence 
of the facts alleged in the answer, unless admitted by the 
complainant, and must fully disclose its defense at the hearing. In 
case of failure to answer, the Commission will take such proof of 
the facts as may be deemed proper and reasonable and make such 
order thereon as the circumstances of the case may require. 

Documentary (c) If documentary evidence is offered, the Commission, in 
evidence. jj eu f requiring the originals to be filed, may, in its discretion, 



RULES OF PRACTICE AND PROCEDURE. 251 

accept certified or otherwise authenticated copies of such documents 
or of such portions of the same as may be relevant; or may require 
such evidence to be transcribed as part of the record. 

5. Hearings may be adjourned from time to time by or at the Hearings may 
direction of the Commission or a commissioner. be adjourned, 

6. The Commission or a commissioner may require the sub- Submission 
mission of biiefs. of briefs. 

7. The Commission may at any time, of its own motion, make Investigation by 
investigations and order hearings into any act or thing done or omitted commission on 
to be done by any public utility which the Commission may believe is 

in violation of any provision of law or of any order or rule of the 
Commission. It may also, through its own experts or employees, or 
otherwise, secure such evidence as it may consider necessary or 
desirable in any formal proceeding in addition to the evidence 
presented by the parties. 

8. Any party to a formal proceeding or any stockholder Any security 
or bondholder or other party pecuniarily interested in the public holder may 
utility affected may apply for a rehearing as to any matters a PP^ \ or 
determined by the Commission and specified in the application 

for the rehearing, and the Commission may grant and hold 
such rehearing on said matters, if in its judgment sufficient reason 
therefor be made to appear. Such application shall set forth 
specifically the ground or grounds on which the applicant considers 
the Commission's decision or order to be unlawful or erroneous. 
Rehearings must be asked for before the effective date of the 
decision or order complained of. In further respects, rehearings 
will be governed by the provisions of Section 66 of the Public 
Utilities Act. 

Complaint for 

Switch Connections and Spurs — Complaints for. 

switch must 

When complaint is made for the installation of a switch con- shoJ ? a J nouni 

nection or spur, under the provisions of Section 39 of the Public 7 ,i , \ » 

Utilities Act. required. 



252 LOUIS SLOSS & CO. 



1. The complaint, in addition to the requirements of Rule 
V.2, must state: 

(a) Character and amount of business which will probably 
be tendered at such connection or spur. 

(b) Length of track necessary to be built by defendant and" 
the cost of the same. 

2. With the complaint shall be filed: 

Map in (a) Map on scale of not less than 100 feet per inch, showing 

triplicate. l oca tion of existing tracks; property lines; buildings and structures 

in the vicinity; and the location and length of the proposed switch 

connection or spur. Such map should be filed in triplicate; one 

copy shall be on tracing linen unless waived by the Commission. 

RULE VIII. 

Value of Property of Public Utilities. 

/ hysicai valu- Formal proceedings instituted by the Commission to ascertain 
fl "? n °1 ? T °v me va l ue of the property of a public utility shall be conducted as 
specified in Section 70 of the Public Utilities Act. Whenever in 
any formal proceeding the value of the property or a portion thereof 
of a public utility becomes relevant and pertinent, the Commission 
may, through its own experts and employees, or otherwise, investigate 
and ascertain such value. 

RULE IX. 
Applications — General Matters Applicable to All. 

1 . All formal applications must be by petition in writing, signed 
by the applicant and duly verified. The petition must set forth the 
full name and post-office address of the applicant and must show 
the full name and address of its attorney, if any, and must contain 
the facts on which the application is based, with a request for the 
order, authorization, permission or certificate desired and a reference 
to the particular provision of law requiring or providing for the same. 
Three copies of the petition shall be filed with the original except 
in applications covered by Rules XVII, XVIII, XIX and XX, 
in which cases the original petition alone need be filed. 



erty of public 
utilities. 



RULES OF PRACTICE AND PROCEDURE. 253 

The petition must contain such further statements as may be 
required by any provision of law or of these rules and must show 
in detail compliance therewith. 

If the applicant is a corporation, there must be annexed to the Information re- 
petition a certified or verified copy of its articles of incorporation Q ui rea with formal 
or charter and all amendments thereof, except in applications a ^ l 
covered by Rules XVII, XVIII, XIX and XX. If maps or 
profiles are filed with the petition, they must always be filed in 
triplicate and one copy thereof shall be on tracing linen. 

2. Whenever under these rules any map, profile, certificate, state- 
ment or other document is required to be filed with a petition and 
the same has therefore been filed with the Commission, the petition 
may state the fact of such filing with the date and the proceeding 
in which or occasion on which the filing was made. 

3. Upon the filing of such petition, the Commission shall exam- Corporate ap- 
ine the same to see whether it establishes a prima facie case for plicants must 
action on the part of the Commission and conforms to these rules. {" e aruc ^es of 
If the petition fails in either of these respects, the Commission will 

give notice of the defects to the applicant, who may correct the same. Correction of 
If the petition be found to state a prima facie case and to comply applications. 
with the rules, the Commission may make an order ex parte granting 
the application or will appoint a time and place for a hearing on 
the same, provided that a hearing shall always be held when 
provided for in the Public Utilities Act. 

RULE X. 

Railroad Crossings — Applications for Construction, 
Alteration or Abolition of. 

When application is made for the construction, alteration or Additional 

abolition of crossings ( 1 ) of public roads, highways or streets by information 

railroads, or (2) of railroads by public roads, highways or streets, ^ ,. . 

/o\ r i i . 11 / a\ c -i i i applications 

or (3) or railroads by railroads, or (4) or railroads by street re g ar ^' in n 

railroads, or (5) of street railroads by railroads, or (6) of public railroad crossings. 

roads or highways by street railroads, or (7) of street railroads 

by public roads or highways, under the provisions of Section 43 of 

the Public Utilities Act, 



254 LOUIS SLQSS & CO. 

1. The petition, in addition to the requirements of Rule IX, 
must state: 

Estimates (a) If the application is for a crossing at grade, such facts, 
of cost, data and estimates of cost as tend to show that it is not reasonable 
or practicable to effect a separation of grades. 

Safety (h) Such safety device or other protection, if any, as the 
devices. ap plj can t mav believe should be installed, with detailed information 
concerning the same. 

2. With the petition shall be filed: 

Map. (a) Map on scale of not less than 200 feet per inch showing 
accurately the location of all tracks, buildings, structures, property 
lines, streets and roads in the vicinity of the proposed crossing. 

Profile maps. (b) Profiles showing ground lines and proposed grade lines 
of approaches on such public roads, highways or streets, railroads 
or street railroads as may be affected by the proposed crossing. 
In case of a contemplated crossing of a railroad by a railroad, the 
profile of each railroad shall show the customary information for 
not less than one ( 1 ) mile on each side of the proposed crossing. 

RULE XL 

Safety Devices at Railroad Crossings — 
Applications for. 

Information re- Whenever a railroad or street railroad desires to protect any 
quired as to crossing which it may have at grade with another railroad or street 

safety devices. ra il roac | t w j tn an interlocking or other safety device, it may make 
application to the Commission for an order approving such device 
and directing its construction and also prescribing the division of 
the cost of construction, maintenance and operation of the same. 

1. The petition, in addition to the requirements of Rule IX, 
must state: 

Description and (a) The kind of device proposed, with a description thereof 
cost of device. an J an estimate of the cost of its construction and operation. 

Number of (b) The average number of trains of each class, and of cars 
trains using [ n case f street railroads, operated daily over the crossing by each 
crossing. ra ji roac ] over a per j 0C J G f not less than thirty (30) days. 



RULES OF PRACTICE AND PROCEDURE. 255 

2. With the petition shall be filed: 

(a) Map on scale of not less than 1 00 feet per inch, Maps. 
showing the location of main tracks, the length and location of 

all switches, sidings and spur tracks, all buildings and obstructions 
to the view in the vicinity, the proposed location of tower, if any, 
and the proposed location of all derails, switches, signals and 
detector bars, which are proposed to be operated by the device. 

(b) A profile of each railroad or street railroad showing the Profiles. 
customary information for not less than one ( 1 ) mile on each 

side of the crossing, in case of railroads, and not less than 1 000 
feet in case of street railroads. 

(c) Copies of such contracts or agreements, if any, as may Copies of 
have been entered into relating to the construction or protection of agreements. 
the crossing. 

RULE XII. 

New Construction or Extensions — Applications for. 

When application is made by a street railroad corporation, gas Information re- 
corporation, electrical corporation, telephone corporation or water quired with 

corporation for a certificate that the present or future public applications for 

• -n i new construction. 

convenience or necessity require or will require a proposed new 

construction or an extension in the cases specified in Section 50a 

of the Public Utilities Act, 

I. The petition, in addition to the requirements of Rule IX, 
must state: 

(a) The proposed location, route or routes, the method of Location. 
construction, and the names of all public utility corporations or Method of 
persons with whom the proposed new construction or extension is construction. 
likely to compete. 

(b) The facts showing that the proposed new construction or Necessity. 
extension is or will be required by public convenience and necessity. 

(c) The manner, in detail, in which it is proposed to finance Method of 
the proposed new construction or extension. financing. 



256 LOUIS SLOSS & C O. 

2. With the petition shall be filed: 

Maps. (a) Map to suitable scale showing the location or route of the 
proposed new construction or extension with its relation to other 
public utilities with which the same is likely to compete, which map 
shall contain all data necessary for a complete understanding of 
the situation. 

Certified (b) When the consent, franchise or permit of a county, city 
copies of anc [ coun ty, municipal or other public authority is necessary, a 
certified copy of the application therefor and of the ordinance or 
other document granting such consent, franchise or permit. If it 
is impossible to file a copy of the application, the facts rendering 
such filing impossible shall be stated. 

RULE XIII. 

Franchises and Permits — Applications for Permission 

to Exercise. 

Information re- When application is made by a street railroad corporation, gas 
quired with corporation, electrical corporation, telephone corporation or water 

corporation for a certificate that public convenience and necessity 
exercise fran- , . f . , ... , f . . 

chises and rec l uire tne exercise or a right or privilege under a franchise or 
permits, permit, in the cases specified in Section 50b of the Public Utilities 
Act. 

1. The petition, in addition to the requirements of Rule IX, 
must state: 

Financial (a) The financial condition of the applicant as defined in 
condition. R u l e J, 6. 

Franchise (b) The facts showing the proceedings theretofore taken with 
proceedings, reference to franchise or permit for which permission and approval 
are sought. 

Reasons for (c) If the application is for permission to exercise a right or 

deia}? in privilege under any franchise or permit granted prior to March 

exercise. 23^ |9J2, but not theretofore exercised, or the exercise of which* 

has been suspended for more than one year, the reason why such 

right or privilege has not been exercised or has been suspended. 



RULES OF PRACTICE AND PROCEDURE. 257 

(d) The facts showing that the exercise of such right or Necessity. 
privilege under such franchise or permit is required by the public 
convenience and necessity. 

2. With the petition shall be filed: 

(a) A certified copy of the written application to the proper Copy of 
county, city and county, municipal or other public authority for application 
its consent, franchise or permit and of the ordinance or other 
document, if any has been secured, granting such consent, franchise 

or permit. If it is impossible to file a copy of the application, the 
facts rendering such filing impossible shall be stated. 

(b) Map to suitable scale showing the streets, avenues and Map. 
all other places and property in or upon or along which it is 
proposed to exercise such franchise or permit. 

3. If a public utility desires to exercise a right or privilege Preliminary order 
under a franchise or permit which it contemplates securing, but required before 
which has not as yet been granted to it, such public utility may a PP llc ^on for 
apply to the Commission for an order preliminary to the issue 

of the certificate. The Commission will, in its discretion, thereupon 
make an order declaring that it will thereafter upon application 
issue the desired certificate, upon such terms and conditions as it 
may designate after the public utility has obtained the contemplated 
franchise or permit. Upon the presentation to the Commission 
of evidence satisfactory to it that such franchise or permit has 
been secured by such public utility, the Commission will thereupon 
issue such certificate. 

RULE XIV. 

Sale, Lease, Assignment, Mortgage or Other 
Disposition of Property — Application for. 

When application is made by a railroad corporation, street Information re- 
railroad corporation, pipe line corporation, gas corporation, electrical quired with ap- 
corporation, telephone corporation, telegraph corporation or water P. c 
corporation for an order authorizing the sale, lease, assignment, . 

mortgage or other disposition of the whole or any part of its 
railroad, street railroad, line, plant or system, necessary or useful 



255 LOUIS SLOSS & CO. 

in the performance of its duties to the public, or any franchise or 
permit or any right thereunder, or by any means whatsoever, direct 
or indirect, the merger or consolidation of its property, franchises 
or permits or any part thereof, with any other public utility, in 
the cases specified in Section 51a of the Public Utilities Act. 

1. The petition must be made by all the parties to the proposed 
transaction and, in addition to the requirements of Rule IX, must 
state : 

Financial (a) The financial condition of each applicant, as defined in 
condition. R u l e I, 6. 

Detailed (b) In detail the reasons upon the part of each applicant for 

reasons for entering into the proposed sale, lease, assignment, mortgage or 

* other disposition of such property, franchise or permit and all the 

facts warranting the same and showing that it is for the benefit 

of the public service. 

2. With the petition shall be filed: 

Copies of (a) A copy of the proposed contract, agreement, lease or 
agreements, mortgage, and if prior agreements have been made between the 
parties relating to the same subject matter, copies of such agree- 
ments must be filed with the petition or referred to as already on 
file with the Commission. 

RULE XV. 

Acquisition of Part or All Capital Stock of Another 
Utility — Applications for. 

Information re- When application is made by any public utility for authorization 
quired with to purchase or acquire, take or hold any part of the capital stock 
applications to f any Q fa eT pUD ij c utility, under the provisions of Section 51b 
purchase f ft p ublic y .j. . A 
property. 

1. The petition must be made by the public utility proposing 
to purchase, acquire, take or hold the stock, and in addition to the 
requirements of Rule IX, must state: 

Financial (a) The financial condition of the applicant and of the 
condition, corporation whose stock is sought to be purchased, acquired, taken 
or held, as defined in Rule I, 6. 



RULES OF PRACTICE AND PROCEDURE. 259 



(b) The reasons why the applicant desires to secure the stock, Reasons for 
and the amount of the stock of the public utility affected already purchase. 
owned or held by applicant, if any. 

(c) Price proposed to be paid for the stock, the terms of Price, terms of 
payment with the market value thereof, the highest and lowest price P a $ m 

during the period of at least one year prior to the application, 
and dividends, if any, paid for a period of five years. 

RULE XVI. 

Stocks, Bonds, Notes and Other Evidences of 

Indebtedness — Applications for Order 

Authorizing Issue of. 

When application is made by any public utility for an order Information re- 

authorizing the issue of stock or stock certificates, or bonds, notes < 7 uire " ^«" 

or other evidences of indebtedness payable at periods of not more • ... 

, r i i i r i i • • lssue securities, 

than twelve months arter the date thereof, under the provisions 

of Section 52 of the Public Utilities Act, 

1. The petition, in addition to the requirements of Rule IX, 
shall state: 

(a) The financial condition of the applicant as defined in Physical con- 
Rule I, 6 and a description of the railroad, street railroad, line, dition of 
plant or system, and equipment of the applicant, with the original a PP Llcani ' 
cost, where possible, and its cost to the applicant, and the amount 

of its stock held by other corporations and their names, and the 
kind of stock held by each. If it is impossible to state the original 
cost, the facts creating such impossibility shall be stated. 

(b) The amount and kind of stock, if any, which the public Amount and 
utility desires to issue, and, if preferred, the nature and extent of & n " °( securities 
the preference: the amount of bonds, notes or other evidences 

of indebtedness, if any, which the public utility desires to issue, 
with terms, rate of interest, and whether and how to be secured. 

(c) The use to which the capital to be secured by the issue Use to which 
of such stock or stock certificates, or bonds, notes or other evidences P rocee " s ore to 
of indebtedness is to be put, with a definite statement of how 

much is to be used severally for the acquisition of property, the 



260 LOUIS SLOSS & CO. 

construction, completion, extension or improvement of facilities, the 
improvement of service, the maintenance of service, the discharge 
or refunding of obligations, and the reimbursement of moneys 
actually expended from income or from any other moneys in the 
treasury as provided by Section 52 of the Public Utilities Act. 

Description of (d) The property in detail which is to be acquired, with its 
property to value, a detailed description of the contemplated construction, 
* completion, extension or improvement of facilities set forth in 
such a manner that an estimate of cost may be made, a statement 
of the character of the improvement of service proposed, and of 
the reasons why the service should be maintained from its capital. 
If it is proposed to discharge or refund obligations or to reimburse 
moneys actually expended, a statement of the nature and description 
of such obligations and expenditures, including the par value of 
the obligations and the amount for which they were actually sold 
and the application of the proceeds and of the moneys expended, 
showing when, to whom and for what paid or applied. 

Copies of (e) Whether any contracts have been made for the acquisition 
all contracts, of such property, or for such construction, completion, extension or 
improvement of facilities, or for the reimbursement of expenditures, 
or for the disposition of any of the stock or stock certificates, or 
bonds, notes or other evidences of indebtedness which it is proposed 
to issue or the proceeds thereof and if any such contracts have 
been made, copies thereof shall be annexed to the petition. 

Detailed in- (/) Whether any of the outstanding stock or stock certificates 

formation re- or bonds, notes or other evidences of indebtedness of the public 

gar ding capital- utility have been issued or used in capitalizing the right to be a 

corporation, or any franchise or permit, or the right to own, 
to be a corpora- ' f . . ° 

tion etc °P erate or en J 0V anv sucn franchise or permit, or any contract tor 

consolidation or lease, and if so, the amount thereof and the 

franchise, right, contract or lease so capitalized. 

Statement of (g) If the stock or stock certificates are to be issued by a 
financial con- corporation formed by the merger or consolidation of two or more 
corporations, the petition shall contain a complete statement of 
the financial condition of the corporations so to be merged or 
consolidated of the kind required by subdivision (a) hereinbefore 
set forth, and of their capital stock at the par value thereof. 



RULES OF PRACTICE AND PROCEDURE. 261 



(/i) Such other facts as may be pertinent to the application. Other pertinent 

facts. 
2. With the petition must be filed: Records which 

/ x a -r i -r r i- i mmt De filed 

(a) A certificate or proposed certificate or proceedings at the w '^ n p e i{i[ on 

meeting of directors and stockholders authorizing the issue of the p rocee Ji n g s 
desired securities with a copy of the mortgage, if any. authorizing issue 

... -r i i- r i -r c iii of securities. 

(b) A certified list of the certificates of stock already out- ~ ._ , ,. . , 
,. iii r i 11 i -r Lertified list of 

standing, with the shares of stock represented by each certihcate, s i oc L no \^ ers 

and the amounts paid to the public utility on each certificate as 
originally issued, either in money, labor or property, stating the 
amount of each. 

(c) Maps, profiles, plans and plats of proposed property and Maps. 
construction showing — 

1 . In the case of railroads, including street railroads, all Information 
information required by the Commission's General Order No. 14. Vr 6 " 6 *^ 

2. In the case of other public utilities, such certified maps' Maps of prop- 
and plans as will indicate to the Commission the property to be erty to be 
acquired and the location, extent and character of the proposed acquired. 
construction. 

(J) Original deeds of property, or certified copies thereof, Copies of 
covered by proposed issue, with a detailed statement of its actual a e " s * 
cost. 

(e) Certified copies of all contracts for the acquisition of Copies of 
proposed property and equipment and for construction, with plans c 
and specifications of such buildings and structures as may have 
been designed. 

(/) Complete inventory of all property and equipment proposed Inventories oj 

to be acquired, prepared upon or in accordance with blank forms P ri 

and specifications prescribed by the Commission, and a statement , . , 

r , , f J Statement of 

of the cost thereof. feonuses 

(g) A certified statement of all cash bonuses and other The Commissions 
donations of property received, if any. order if gran < 

will prescribe 

3. If the application is granted, in whole or in part, the how proceeds 
Commission's order will: ma ^ be used ' 



262 



LOUIS SLOSS & CO. 



Require report 
terms and con- 
ditions of sales 

of securities. 
Require report 

showing use 
of moneys. 



Specify other 
conditions. 



(a) Prescribe the purposes and amounts for which the issue 
authorized or the proceeds thereof may be used. 

(b) Direct the applicant to report under oath the sale or sales 
of the securities or obligations authorized, the terms and conditions 
of sale and the amounts realized therefrom. 

(c) Require the applicant to make a verified report at least 
every six months showing in detail the use and application by it 
of the moneys so realized until such moneys shall have been fully 
expended. 

(d) Specify such condition or conditions and prescribe such 
terms as the Commission may deem reasonable and necessary to 
the exercise of its permission. 



RULE XVII. 

Increases in Charges — Applications for Permission 

to Make. 

Information re- When application is made by any public utility to raise any 

quired with ap- rate, fare, toll, rental or charge or so to alter any classification, 

plication to contract, practice, rule or regulation as to result in an increase in 

ar ° ei - any rate, fare, toll, rental or charge, under the provisions of Section 

20 of Article XII of the Constitution of this State or Section 63a 

of the Public Utilities Act. 

1 . The petition, in addition to the requirements of Rule IX, 
must state: 

Statement of (a) The rates, fares, tolls, rentals or charges in effect and 
present rates, the increases which it is desired to make. These allegations may 
be made by reference to schedules accompanying the petition. 

Reasons for (k) The reasons for the increase, to be stated in full, so that 
increase, the Commission may clearly see the justification therefor. 

2. With the petition must be filed: 

Schedules ( a ) Such schedules or data, if any, as the Commission's 
or data, tariff circulars or other applicable orders may, from time to time, 
specify. 



RULES OF PRACTICE AND PROCEDURE. 263 

3. If the Commission is satisfied with the showing, so made. Action of 
it may take action on the application ex parte: otherwise it may Commission. 
order a hearing and give notice thereof to such corporations or 
persons as it may consider necessary or desirable. 

RULE XVIII. 

Long and Short Haul Rule: Thirty-Day Notice 
Rule — Applications for Relief from. 

When application is made by a common carrier for authorization Information 
to charge less for a longer than a shorter haul over the same required with 
line or route in the same direction, under the provisions of Section a ^ \ catlons 
21 of Article XII of the Constitution of this State or of Section i jr . if 
24a of the Public Utilities Act or by a telegraph or telephone 
corporation for authorization to charge less for a longer than for 
a shorter distance service for the transmission of messages or 
conversations over the same line or route in the same direction, 
under the provisions of Section 24b of the Public Utilities Act, 
or by any public utility to change a rate, fare, toll, rental, charge 
or classification, or a rule, regulation or contract relating to or 
affecting any rate, fare, toll, rental, charge, classification or service, 
in cases other than those covered by Rule XVII, on less than 
thirty days' notice, under the provisions of Section 1 5b of the 
Public Utilities Act, 

1. The petition, in addition to the requirements of Rule IX, 
must state: 

(a) Such facts in connection with the matter and the reasons Facts bearing 
for the desired relief as may be specified from time to time in the on applications, 
Commission's tariff circulars or other applicable orders or instructions. 

2. With the petition must be filed: 

(a) Such schedules or data, if any, as the Commissions Schedules or data. 
tariff circulars or other applicable orders, or instructions may, from 
time to time, specify. 

3. If the Commission is satisfied with the showing so made, Action of 

it may take action on the application ex parte: otherwise it may Commission. 
order a hearing and give notice thereof to such corporations or 
persons as it may consider necessary or desirable. 



264 LOUIS SLOSS & CO. 



RULE XIX. 

Excessive or Discriminatory Charges — Applications for 
Permission to Refund. 

Information re- When application is made by any public utility to make 
quired With ap~ reparation to any shipper or consumer on account of the rates 
1 ^ A cnar § ec ^ t0 sa ^ shipper or consumer being excessive or discrimina- 
tory, under the provisions of Section 21 of Article XII of the 
Constitution of this State, 

1. The petition, in addition to the requirements of Rule IX, 
must state: 

Statement of (a) Such facts in connection with the matter as may be 
facts, specified from time to time in the Commission's tariff circulars or 
other applicable orders or instructions. 

2. With the petition shall be filed: 

Admissions. (a) Such admissions, undertakings or statements on the part 
of the applicant as the Commission's tariff circulars or other 
applicable orders or instructions may, from time to time, specify. 

Action of 3. If the Commission is satisfied with the showing so made, it 
Commission. ma y take action on the application ex parte: otherwise it may 
order a hearing and give notice thereof to such corporations or 
persons as it may consider necessary or desirable. 

RULE XX. 

Extensions of Time to File Required Reports, State- 
ments or Data or to Comply with Commission's 
Orders — Applications for. 

Information Whenever a public utility has been required by the Commission 

required with i n l e anv report, statement or data or to comply with any other 

r order of the Commission within a time specified, and for any 

.• . ri reason is unable to do so within the time specified, it must, before 

reports. tne expiration of such time, file with the Commission an application 

for extension of time, in which event: 



RULES OF PRACTICE AND PROCEDURE. 265 

1 . The petition shall set forth in detail : 

(a) What, if any, effort has been made by the applicant Efforts made to 
to prepare such report, statement or data or to comply with such prepare reports. 
order. 

(b) Any facts tending to show why the said report, statement Reasons for 
or data cannot be filed or said order complied with within the delay. 

time prescribed. 

(c) Any other facts which may make an extension of time 
necessary or proper. 

(d) The further period of time deemed necessary by the Time necessary 
applicant within which to make and file such report, statement or to complete. 
data or to comply with such order. 

2. The Commission may direct a hearing upon said petition Action of 
and in that event the applicant shall attend before the Commission Commission. 
or the Commissioner holding the hearing and produce such witnesses 

and documents as the Commission may require. 

RULE XXI. 

Other Applications. 

All applications relating to matters over which the Commission Information re- 
has jurisdiction and which are not governed by any of the preceding quired with 
rules shall be made by petition, setting forth the name and address otner applications. 
of the applicant and the matter with reference to which the 
Commission's order, authorization or permission is desired. There- 
upon the procedure shall be such as the Commission may prescribe. 

RULE XXII. 
Deviations from Rules — Authorization for. 

In special cases, for good cause shown, the Commission may 
permit deviations from these rules, in so far as it may find com- 
pliance therewith to be impossible or impracticable. 



266 LOUIS SLOSS & CO. 



RULE XXIII. 
Amendment of Rules. 

These rules may be amended at any regular session of the Com- 
mission. 

RULE XXIV. 
Forms Prescribed for Use. 

The following forms may be used in cases to which they are 
applicable, with such modification as the circumstances may render 
necessary : 

1. Formal Complaint. 

2. Formal Application. 

3. Order to Satisfy or Answer a Complaint. 

4. Answer. 

5. Notice of Hearing on Complaint. 

6. Published Notice of Hearing on Application. 



No. 1. 

Formal FORM OF FORMAL COMPLAINT 

complaint. 

Before the Railroad Commission of the State of California. 



No. 



(To be inserted by Secretary of 
Commission.) 



(Insert name of complainant) 

Complainant, 
vs. 
(Insert name of defendant) 
Defendant. 

COMPLAINT. 
The complaint of (here insert full name of complainant) 
respectfully shows : 

1. That (here state occupation and post-office address of 
complainant). 



RULES OF PRACTICE AND PROCEDURE. 267 

2. That (here insert full name, occupation and post-office 
address of defendant). 

3. That (here insert fully, clearly and specifically the act 
or thing done or omitted to be done which complainant claims 
constitutes a cause of complaint, with a reference to the law, order 
or rule, and the section or sections thereof, of which a violation 
is claimed) . 

Wherefore complainant asks (here state specifically the relief to 
which complainant believes he is entitled). 

Dated at , California, this 

day of 191... 



(Complainant's name.) 
(Name and address of attorney, if any.) 



State of California, 






(Insert name of complainant or other person qualified to verify), 
being first duly sworn, deposes and says: That he is the com- 
plainant in the action entitled as above; that he has read the 
foregoing complaint and knows the centents thereof; and that the 
same is true of his own knowledge, except as to the matters which* 
are therein stated on information or belief, and that as to those 
matters he believes it to be true. 



Subscribed and sworn to before me, this day of 

191... 



Notary Public in and for the County of 

State of California. 



268 LOUIS SLOSS & CO. 



No. 2. 
Formal FORM OF FORMAL APPLICATION 

Before the Railroad Commission of the State of California. 

In the matter of the Application of 
(here insert name of applicant) 
for (here insert desired order, 
authorization, permission or cer- 
tificate: thus, "order authorizing 
issue of stocks and bonds"). 



No 

(To be inserted by Secretary of 
Commission.) 



APPLICATION. 
The petition of (here insert name of applicant) respectfully 
shows : 

1. That (here insert principal place of business or post-office 
address, character of business and territorial extent thereof, of 
applicant) . 

2. That (here insert clearly, specifically and fully the facts 
required by these Rules and any additional facts which the 
applicant desires to state to show the relief which he desires and 
the facts on which it is based). 

Wherefore petitioner asks that the Railroad Commission of the 
State of California (here state specifically the action which the 
applicant desires the Railroad Commission to take). 

Dated at . ■ , California, this 

day of ... 191... 



( Verification. ) ( Petitioner's name. ) 

(Name and address of attorney, if any.) 



RULES OF PRACTICE AND PROCEDURE. 269 



No. 3. 

FORM OF ORDER TO SATISFY OR ANSWER A COMPLAINT Order to satisfy 

or answer 
Before the Railroad Commission of the State of California. complaint 

(Insert name of Complainant) 



Complainant, 
vs. 
(Insert name of defendant) 
Defendant. 



I No. 



(Number to be inserted by 
Secretary of Commission.) 



ORDER TO SATISFY OR ANSWER. 
To (here insert name and address of defendant). 

You are hereby notified that a complaint has been filed in the 
action entitled as above against you as defendant, and you are 
hereby ordered to satisfy the matters therein complained of or to 
answer said complaint in writing within ten (10) days from the 
service upon you of this order and the copy of said complaint 
which is hereunto attached. 

By order of the Railroad Commission. 

Dated at San Francisco, California, this day of 

191... 



Secretary Railroad Commission of 
the State of California, 
(Railroad Commission Seal.) 



270 LOUIS SLOSS & CO. 



No. 4. 

^miper fo form OF ANSWER TO FORMAL COMPLAINT 

formal complaint. 

Before the Railroad Commission of the State of California. 



(Insert name of complainant) 

Complainant, 
vs. 
(Insert name of defendant) 
Defendant. 



No 

(Insert number of case.) 



ANSWER. 

The above named defendant, for answer to the complaint in this 
proceeding, respectfully states: 

1. That (here follow specific admissions or denials of the 
material allegations of the complaint, and also the facts relied 
upon as a defense. Continue numbering each succeeding paragraph). 

Wherefore the defendant prays that the complaint be dismissed 
(or other appropriate prayer). 



(Verification.) (Name of defendant.) 



RULES OF PRACTICE AND PROCEDURE. 



271 



No. 5. 
FORM OF NOTICE OF HEARING ON COMPLAINT 

Before the Railroad Commission of the State of California. 
(Insert name of complainant) 

Complainant, 
vs. 
(Insert name of defendant) 
Defendant, 



Notice of 
hearing on 
complaint. 



I No. 



(Insert number of case.) 



NOTICE OF HEARING. 

To (here insert names of all parties). 

You and each of you are hereby notified that the Railroad 
Commission of the State of California has set the above entitled 

case for hearing before Commissioner 

on (day of week), the (day of month), day of (name of month), 

191 . ., at o'clock . . M., in the office of the Commission, 

Room , Building, San Francisco, 

California, at which time and place you will be given an oppor- 
tunity to be heard. 

By order of the Railroad Commission. 

Dated at San Francisco, California, this day 

of 191... 



Secretary Railroad Commission of 
the State of California. 



(Railroad Commission Seal.) 



272 LOUIS SLOSS & CO. 



No. 6. 
Publish notice FORM OF PUBLISHED NOTICE OF HEARING ON APPLICATION 

of hearing on 
application. Before the Railroad Commission of the State of California. 

In the matter of the Application of 
(here insert name of applicant) 
for (here insert desired order, 
authorization, permission or 
certificate) . 



No 

(Insert number of case.) 



NOTICE OF HEARING. 

Notice is hereby given that the application of (name of 
applicant in full) for the (approval, determination, consent, per- 
mission, certificate or authorization) of the Railroad Commission 
of the State of California to (here state nature of consent asked 

for) will be heard before Commissioner at the 

office of the Commission in the Building, San 

Francisco, California, on (day of week), the (day of month) 

day of (name of month), 191 . ., at o'clock in the 

noon. 

By order of the Railroad Commission. 

Dated at San Francisco, California, this day 

of 191... 



Secretary Railroad Commission of 
the State of California. 



General Index. 



Page 

Introduction 13 

John M. Eshleman, President of the Commission. 

Biographies of Commissioners 14 

The Public Utilities Act and Its Relation to the Public 17 

Max Thelen, Commissioner and Attorney for the 
Commission. 

Valuation of Public Utilities 2Z 

Henry Lardner, Manager San Francisco Office, 

J. G. White & Co., Engineers. 

Index to Leading Railroad and Public Service Commissions. . 275 

Index to Constitutional Amendment No. 50 279 

Index to Constitutional Amendment No. 6 279 

Index to Constitutional Amendment No. 47 280 

Index to Public Utilities Election Act 280 

Index to Public Utilities Act 281 

Index to Rules of Practice 297 



INDEX. 275 



Leading Railroad and Public Service 
Commissions. 

SUBJECT INDEX 



Section Page 

Introduction to report 35 

OREGON. 

Introduction i 36 

Organization and office system 2 36 

Physical valuation 3 37 

Public utilities 4 39 

Rate making 5 39 

Express rates 6 40 

Litigation 7 41 

Grade crossings 8 41 

Complaints to Interstate Commerce Commission 9 42 

Car for track scale tests 10 42 

Long and short haul clause 11 43 

Co-operation 12 43 

WASHINGTON. 

Introduction 1 44 

Organization and office system 2 44 

Physical valuation 3 45 

Engineering department 4 47 

Court proceedings 5 48 

Service and facilities 6 50 

Public utilities 7 50 

Rate fixing 8 51 

Results attained by the Commission 9 51 

NEBRASKA. 

Introduction 1 53 

Organization and office system 2 53 

Stock and bond law 3 55 

Telephone companies 4 56 

Electric street railways 5 56 

Rate litigation 6 56 

Monthly reports from railroads 7 58 

Annual reports 8 58 

Form of accounts 9 59 

Physical valuation 10 59 

Attitude toward physical valuation 11 61 

New procedure on appeal 12 62 

Changes in schedules 13 62 



276 LOUIS SLOSS & CO. 

Leading Railroad and Public Service Commissions — Continued 

Section Page 
MINNESOTA. 

Introduction i 63 

Organization and office system 2 63 

Express investigation 3 64 

Minnesota rate case 4 66 

Federal courts 5 67 

Changes in rates 6 68 

Grade crossings 7 68 

Physical valuation 8 69 

Form of accounts 9 70 

Service and facilities 10 70 

Interstate commerce 11 70 

Accident reports 12 71 

Litigation 13 71 

WISCONSIN. 

Introduction 1 72 

Organization and office system 2 72 

Procedure on appeal 3 74 

Rate fixing 4 75 

Stock and bond law 5 76 

Indeterminate permits 6 77 

Use of facilities by other utilities 7 78 

Physical valuation '. 8 79 

Depreciation account 9 79 

Public convenience and necessity law 10 80 

Rate changes n 80 

Municipal councils 12 81 

Gas, electric and telephone inspection 13 81 

Rate department 14 83 

Department of statistics and accounts 15 83 

Express investigation 16 85 

Writing of opinions 17 85 

Cost basis 18 86 

Relation between state university and commission 19 86 

NEW YORK. 

SECOND DISTRICT. 

Introduction 1 87 

Organization and office system 2 88 

Division of heat, light and power 3 90 

Division of statistics 4 91 

Division of tariffs 5 92 

Division of traffic 6 92 

Division of engineering and inspection 7 93 



INDEX. 277 



Leading Railroad and Public Service Commissions — Continued 

Section Page 

Division of telegraphs and telephones 8 93 

Stocks and bonds 9 93 

Certificate of public convenience and necessity 10 95 

Physical valuation 11 96 

Rate fixing 12 97 

Relation with newspapers 13 98 

Relation between commission and corporations 14 98 

Elimination of grade crossings 15 99 

Discounts and expenses 16 99 

Amortization fund 17 100 

MASSACHUSETTS. 
A. 

RAILROAD COMMISSION. 

Introduction 1 100 

Organization and office system 2 101 

Rate fixing 3 102 

Facilities, equipment, safety devices 4 103 

Powers of board as to charters, finances, and construction 5 103 

Grade crossings 6 107 

Court procedure 7 107 

Preparing annual report 8 108 

Library 9 108 

Inspectors 10 109 

B. 

GAS AND ELECTRIC COMMISSIONERS. 

Introduction 1 109 

Organization and office system 2 no 

Rate fixing 3 in 

Stocks, bonds, consolidation 4 112 

New gas or electric plants 5 112 

Accounts 6 113 

Litigation 7 113 

NEW YORK. 

FIRST DISTRICT. 

Introduction 1 114 

Organization and office system 2 114 

Legal department ' 3 117 

Stocks and bonds 4 119 

Certificates of public convenience and necessity 5 121 

Approval of franchises 6 122 

Franchise bureau 7 122 

Physical valuation 8 124 



278 LOUIS SLOSS & CO. 



Leading Railroad and Public Service Commissions — Continued 

Section Page 

Newspapers 9 124 

Library 10 125 

Accidents n 125 

MARYLAND. 

Introduction 1 125 

Organization and office system 2 126 

Stock and bond issues 3 126 

INTERSTATE COMMERCE COMMISSION. 

Note 1 127 

GEORGIA. 

Introduction 1 127 

Organization and office system 2 128 

Legal department 3 129 

Rates 4 129 

Stock and bond issues 5 130 

Express rates 6 131 

Public utilities 7 131 

Telephone and telegraph companies 8 131 

Court review and appeal 9 131 

Railroad maps 10 132 

Passenger train delays 11 132 

General orders, rules and regulations 12 132 

TEXAS. 

Introduction 1 133 

Organization and office system 2 133 

Railroad rates 3 133 

Emergency rates 4 134 

Express rates 5 135 

Department of statistics and accounts 6 136 

Valuation of railroad properties 7 137 

Stock and bond law 8 139 

Control over corporations 9 139 

Depot complaints 10 140 

Newspapers 11 140 

OKLAHOMA. 

Introduction I 140 

Organization and office system 2 141 

Court procedure 3 142 

Litigation 4 144 

Commission's business 5 147 

Auditing department 6 149 



INDEX. 279 



Leading Railroad and Public Service Commissions — Continued 

Section Page 

Engineering department 7 150 

Telephone department 8 150 

Rate department 9 151 

Corporation clerk department 10 151 

Municipal utilities 11 151 

Gas and electric companies 12 152 

Use of initiative by corporations 13 152 

RECOMMENDATIONS 152 



Assembly Constitutional Amendment No. 50. 

Page 

Decision of Commission not subject to review, except 155 

Discrimination — railroads may not discriminate in charges or facilities, or 

between places or persons 155 

Long and short haul — regulation of 156 

Rates — railroad, may not be raised without approval of Commission 155 

Reparation to shippers — Commission may order 156 

Special cases — exceptions in, to be approved by Commission 156 



Assembly Constitutional Amendment No. 6. 

Page 

Act of 1911 159 

Additional powers 159 

Commission — powers of, to establish rates 158 

Powers of, to examine records 159 

Commissioners — to be appointed 157 

Disqualifications 158 

Removal of 158 

Term of office six years 157 

Vacancies, to be filled by Governor 158 

Districts — State may be divided into 157 

Facilities — Commission to control 159 

Orders — Commission to enforce 159 

Orders of Commission effective upon approval of majority 158 

Powers — additional 159 

Powers of Commission — to establish rates 158 

To examine records 159 

Railroad Commission Act of 191 1 159 

Railroad Commission — to consist of five members 157 

Service — Commission to control 159 



280 LOUIS SLOSS & CO. 



Senate Constitutional Amendment No. 47. 

Page 

Public utilities — defined by Constitutional Amendment 161 

Placed under control of Railroad Commission 161 

Powers of Commission plenary 162 

Jurisdiction of Commission 162 

Powers vested in boards of supervisors respecting public utilities to cease, 

except 162 

Procedure under which municipalities may retain control 162 

Municipalities — procedure under which they may retain control 162 



Public Utilities Election Act. 

Ballot — form of, election to retain 167 

Form of, election to surrender 170 

Form of, election to re-invest 171 

Control of public utilities — municipalities may retain 163 

Municipalities may surrender 163 

Municipalities may re-invest themselves with 163 

Municipalities may re-invest themselves with control 171 

How question may be submitted to the people 164 

Procedure when municipality has elected to control 170 

Question of control may be submitted to voters at any election 171 

When question may be submitted to the people 164 

Definitions of various terms 164 

Election — to retain, canvassing returns of 168 

To surrender — canvassing returns of 170 

To re-invest — canvassing returns of 172 

Laws governing special municipal elections to apply 173 

One copy of returns must be filed with Commission if municipality 

delegates control 169 

Elections — special, under the Act 166 

Under Act 172 

"Legislative Body" defined 163 

Limitations 172 

"Municipal Corporation" defined 163 

Municipalities — control of public utilities 163 

May retain control 163 

May surrender control 163 

May re-invest themselves with control 163 

Ordinance — publication of 167 



INDEX. 281 

PUBLIC UTILITIES ELECTION ACT— Continued 

Page 

Petition — filing of 164 

Form of 164 

Identification of signatures 165 

New 165 

Must be certified ' 165 

Supplementary 165 

Ten per cent, of qualified electors must sign 164 

Voters — instructions to 168 



Public Utilities Act. 



Page 

Abatement — no cause of action to abate because of this act 241 

Accidents — Commission to investigate 207 

Report of filed with Commission 207 

Account — for disposition of proceeds of sale of stocks, bonds, etc 216 

Accounts — kept by public utility 231 

Production of from without State 224 

Subpoena for production of 220 

System of, prescribed by Commission 210 

Act — name of 175 

Action — cause of, when shall accrue in court 228 

Right of, not affected by this act 236 

Additional cars — Commission may order 203 

Adequate service to be furnished 185 

Annual reports — of Commission 185 

To be furnished to Commission by public utilities 198 

Appeal to Supreme Court may be made 229 

Appeals — in mandamus or injunction proceedings instituted by Commission 236 

Appliances — safety, to be approved by Commission 201 

Appointment of Commissioners 180 

Arrests — assistant secretary to make 182 

Articles of incorporation — must be filed with Commission 212 

Assignment — order authorizing to be obtained 213 

Assistant secretary of Commission 182 

Attorney — appointed by Commission 181 

Parties may be represented by 226 

Attorney General — when to conduct trial in court 235 

Attorneys — public, shall assist Commission 235 



282 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Page 

Auto stage and stage lines — Commission to control 201 

Billing — false and other similar offenses prohibited 194 

Blanks — furnished by Commission to be properly filled 198 

Board of control to audit claims 184 

Bond — may be increased by order 232 

To be executed on stay of order by supreme court 231 

Bonds — account for disposition of moneys derived from sale of 216 

Authorized by public utilities prior to act and not issued 219 

Fees on order of authorization of 223 

Issue of, subject to regulation 214 

Public Utilities — May issue, less than, equivalent to or greater than author- 
ized or subscribed capital stock 215 

Payable in more than twelve months 216 

Proceeds of sale to be applied to purposes specified in order 216 

Issued without order of Commission are void 217 

Penalty for fraudulent issue of 217 

Approval of, by Commission, no guarantee 218 

Authority of articles of incorporation, vote of stockholders or directors 
previous to taking effect of this act not sufficient for issuing without 

order of Commission 219 

Commissioners or employees must not own, except 182 

Conditions under which public utilities may issue 214 

Issue must be authorized by Commission 215 

Investigations by Commission 215 

Books — subpoena for production of 220 

Cars — carriers to interchange 193 

Power of Commission to order use of additional 203 

Car service — Commission may order through 200 

Certificate of public necessity must be obtained before exercising right of old 

franchises 212 

Certificate of public necessity must be obtained before beginning any new 

construction, except 211 

Certificate — issued on terms and conditions 212 

Issuance of or refusal 212 

Of public convenience and necessity 211 

Of public necessity, articles of incorporation filed on application for 212 

That order has not been revoked recorded with county recorder 222 

Certiorari — writ of (see Review) 229 

Writ of, to supreme court 229 

Changes in schedules to be approved 187 

Charges — Commission may fix 187 

Must not exceed those in effect October 10, 191 1 187' 

Public utilities must publish 187 

To be fixed by Commission 199 



INDEX. 283 



PUBLIC UTILITIES ACT— Continued 

Charges — Continued. Page 

To be just and reasonable 185 

Charitable institutions — passes to inmates 189 

Claims — false, prohibited 195 

Classifications — of rates by carriers to be filed 185 

Of service, electricity, etc 208 

To be fixed by Commission 199-200 

To be changed only on notice to Commission 187 

Commission — defined 176 

Findings of fact conclusive 230 

May alter or modify rates 227 

May authorize employee to inspect books, accounts, etc 224 

May issue process to enforce attendance of witness 225 

May inspect books, papers, documents and accounts 224 

May order production of books, accounts, etc., from without the state .... 224 

May report to superior court refusal to testify, produce books, etc 221 

May suspend rates 227 

To enforce law of state 235 

Upon notice, may rescind, alter or amend order 228 

Commissioner — appointment 180 

Defined 176 

Commissioners — removal of 181 

Salary of 184 

Vacancies t8i 

Common carrier — defined 177 

Long and short haul provision 195 

To establish joint rates, when 200 

May not engage in transportation until schedules are filed 188 

Competition — Commission to settle disputes as to 211 

Complaint — all matters may be joined in one hearing 225 

For enforcement of order of reparation filed in court in one year 234 

Not to be dismissed because of absence of direct damage 225 

To be filed within two years 234 

Public utility shall have right to file 226 

Regarding charges for gas, electricity, water or telephone, by whom to 

be made 224 

Who may make complaints against public utilities 224 

Method of handling by Commission 224 

Copy of, to be served on alleged offender 225 

Complaints by public utilities may be heard ex-parte 226 

Consolidation — contract for, not to be capitalized 216 

Consolidations — public utilities may not make without permission of Com- 
mission 213 

Construction — new, certificate of necessity 211 

Of act 241 



284 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Page 

Constitutionality of act — intention of legislature stated 241 

Consumer may have meter tested 209 

Contempt 236 

Power to punish for 221 

Process on 219 

Violation of order of Commission constitutes 239 

Control of all public utilities vested in Commission 199 

Copies — of official documents and orders filed, evidence 222 

Corporation — defined 176 

Right to be, not to be capitalized 216 

Crossings — grade prohibited, except 206 

All railroad, under jurisdiction of Commission 207 

Commission may abolish 207 

Commission may require separation of grades 207 

Cost of work to be divided 207 

Power of Commission relative to 206 

Damages — by way of example 235 

Public utilities may be sued for actual and exemplary 235 

Public utility using other public utilities' equipment liable for 206 

Decision — copy of to be served on corporation or person complained of 225 

Of Commission to be complied with 199 

Shall be made and filed after hearing concluded 225 

Defendant entitled to hearing 225 

Demurrage — charges to be uniform 208 

Deposition — provision for taking 220 

Depreciation account to be carried as prescribed 210 

Depreciation charges — Commission to fix 210 

Depreciation funds — Commission to prescribe rules for expenditure of 211 

Definitions — "Commissioner" 176 

"Commission" 176 

"Common carrier" 177 

"Corporation" 176 

"Express corporation" 177 

"Electrical corporation" 178 

"Electrical plant" 178 

"Employees" 190 

"Families" 190 

"Gas corporation" 178 

"Gas plant" 178 

"Person" 176 

"Pipe line" 177 

"Pipe line corporation" 178 

"Public utility 180 



INDEX. 285 



PUBLIC UTILITIES ACT— Continued 

Definitions — Continued Page 

"Railroad" 177 

"Railroad corporation" 177 

"Street railroad" 176 

"Street railroad corporation" 176 

"Telegraph corporation" 179 

"Telegraph line" 179 

"Telephone corporation" 179 

"Telephone line" 179 

"Transportation of persons" 176 

"Transportation of property" 176 

"Vessel" 180 

"Warehouseman" 180 

"Water corporation" 179 

"Water system" 179 

"Wharfinger" 180 

Discrimination — by carriers prohibited 188 

P means of false billing, etc., prohibited 194 

By public utilities other than carriers 191 

Common carriers must provide facilities for interchange of business 

without 193 

Public utilities, prohibited from, between localities or classes of service. . . . 192 
Disposition of certain property — public utilities may not make without 

permission of Commission 213 

District attorney — when to aid in trial in court 235 

Dividends — Commission may allow distribution of 192 

Division of rates — Commission may establish on through business 200 

Duty of public utility to furnish commodity or perform service 201 

Economies — public utility may profit from 192 

Electrical plant defined 178 

Electrical corporation defined 178 

Employees of Commission — compensation of 184 

How paid 184 

Expenses 184 

Defined 190 

Engineers — employment of 182 

Equipment — commission may order 208 

Suitable, to be employed 185 

To be approved by Commission 201 

Public utility using other public utilities' equipment liable for damage 206 

Telephone, Commission may order joint use of 205 

Evidence — accident reports not to be used as 207 

Copies of documents as 222 

Who may offer at hearing 225 



286 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Evidence — Continued. Page 

Certified copies of records accepted as 222 

Commission may take 220 

Commission not bound by technical 219 

No new or additional, may be introduced in the supreme court 229 

Excess charges — complaints on within two years 234 

Expenses — of Commission paid, how 184 

Experts — employment of 182 

Express corporation — denned 177 

Reduced rates by, prohibited 189 

Express packages — Commission to fix zones for free delivery of 208 

Time of receipt, etc 208 

Extensions — certificate of public convenience and necessity 211 

Power of Commission to order 202 

Facilities — inadequate, Commission to protect public from 201 

Must be uniform , 189 

Public utility must be adequate 185 

Telephone, Commission may order joint use of 205 

False billing prohibited 194 

Families — defined 190 

Fares — Limitation on charges by street or interurban railroad 197 

Schedules to be filed 185 

To be changed only on notice to Commission 187 

To be fixed by Commission 199 

Fees — certificate authorizing issue of bonds, notes, etc 223 

Certified copies of documents 223 

For testing of meter, etc 208 

Of witnesses and mileage 220 

For papers, records, official documents, reports of public utilities and 

reports of Commission 223 

Paid into state treasury to credit of "Railroad Commission Fund" 223 

Findings admissible in evidence 233 

By single commissioner 183 

Of fact shall be conclusive 229 

Fine — prescribed for violation of act or of order of Commission 238 

Foreign corporations — restrictions on right to transact public utility business.. 197 

Foreign public utility corporations — limitation placed on 197 

Franchises — corporation, not to be capitalized 216 

Franks — free telephone and telegraph 191 

Free delivery — Commission to fix zones for free delivery of express packages. . 208 

Of telephone messages 208 

Of telegraph messages 208 

Free transportation — for Commission 184 

For exhibits permitted 191 



INDEX. 287 



PUBLIC UTILITIES ACT— Continued 

Free Transportation — Continued. Page 

In case of public calamity, permitted 191 

Gas corporation defined 178 

Gas plant defined 178 

Good will, corporation — not to be capitalized 216 

Grade crossings — construction of in future prohibited 206 

Power of Commission to abolish 207 

Hauls — long and short, regulation of 195 

Hearing — by single commissioner 183 

Commission may initiate 227 

In court to have preference on calendar 232 

Who may be heard and may introduce evidence 233 

Hearings — this act and rules of practice to govern 219 

Improvements — Commission may order new buildings for convenience of 

employees or public 202 

Commission may specify manner of building and site 202 

Issue of stocks, bonds, notes, etc., for 214 

Power of Commission to order 202 

Incrimination no excuse for refusal to testify 222 

Indebtedness — public utilities exempt from provisions of Sections 309 and 456 

of the Civil Code limiting 215 

Industrial tracks — interchange switching 204 

Information — Commission entitled to, from public utilities 198 

Furnished, confidential unless ordered published by Commission 198 

Injunction — Commission may seek against public utility 236 

Inspection — accounts, books, papers, etc 224 

Right of public as to carriers' schedules 185 

Interchange of business — common carriers must provide facilities for, without 

discrimination 193 

Between telephone and telegraph corporations, under certain conditions.. 194 

Of passengers and freight between carriers 193 

Switching to industrial tracks 204 

Interference — Commission to settle disputes as to 211 

Interstate commerce — this act not to apply to 242 

Interstate Commerce Commission — Commission may petition 201 

Interstate rates — Commission to investigate, etc 201 

Filing of schedules by telegraph and telephone corporations 192 

Interurban railroad — fare to be charged within city 197 

Investigation of accidents 207 

Issuance of securities — control vested in the state 214 

Joint action — by public utilities, Commission may order 202 

Joint cost — of structure to be apportioned between public utilities 202 

Joint facilities — Commission may require use of 205 

Joint rates — Commission to fix over common carriers 201 



288 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Joint rates — Continued. Page 

Between telegraph and telephone corporations 205 

To be fixed by Commission, when 200 

Must be established 194 

Joint tariff — only one copy of, need be filed 188 

Joint tariffs — filing of schedules showing 188 

Jurisdiction — of Commission generally stated 199 

Of supreme court exclusive 229 

No other than supreme court shall have 230 

Lease — order authorizing to be obtained 213 

Legislature — may remove Commissioners 181 

Limitation placed on foreign public utility corporations 197 

Loading of cars — Commission to regulate 208 

Time allowed for loading or unloading 208 

Commission to fix demurrage charges 208 

Long and short haul — provision as to carriers 195 

Rule applied to telegraph and telephone companies 195 

Mandamus — Commission may proceed against public utility by 236 

Shall lie from supreme court to Commission 229 

Measurement of gas, water, electricity 208 

Mergers — public utilities may not make without permission of Commission. . . . 213 

Messages — one telegraph or telephone company to transmit messages of another 194 

Meetings — of Commission to be public 183 

Meters — any consumer may have tested 209 

Fee for testing 209 

Testing of '. 208 

Mileage — may be demanded at time of service 220 

Ministers — passes may be issued to 189 

Misdemeanor — violation of confidence, a 198 

Violation of act or of order of Commission a 238 

Money — impounded, when to be distributed and to whom paid 231 

Moneys — expended, reimbursement of 214 

Mortgage, authorization to execute 213 

Municipal corporations — powers not affected by this act 240 

New construction — certificate of necessity 211 

New structures — power of Commission to fix site 202 

Notes — issue of, subject to regulation 214 

For not more than twelve months, may issue without order 214 

Notice of change in rates, fares, etc., to be given to Commission 187 

Of hearing to fix valuation 233 

Posting by carrier as to schedules 185 

Oaths — administration of 220 

Of office of commissioners and employees 182 

Office — of Commission in San Francisco 182 



INDEX. 289 

PUBLIC UTILITIES ACT— Continued 

Page 

Order — authorizing issue of bonds 217 

Authorizing issue of stock 217 

Certain may be recorded with county recorder 222 

Copy of to be served on corporation or person complained of 225 

In collateral action, when conclusive 228 

May be altered, amended or rescinded 228 

Obtained by false representation, penalty 217 

Of Commission to be complied with 199 

Of reparation 234 

Of supreme court reversing order of Commission on three days' notice 230 

Of supreme court, suspending order of Commission, to contain finding 

of damage 230 

On writ of review, supreme court may suspend 230 

Production of books, accounts, etc., from without state 224 

Rescinding, altering or amending, to be served on public utility 228 

Upon hearing, when to take effect 226 

Stay of, bond to be executed 231 

To be entered on records of Commission 222 

Orders changed by Commission should have effect of original orders 228 

Orders of Commission — public utilities shall obey all 199 

Orders of suspension should not be over 120 days 227 

Extended not over 6 months 227 

To go into effect in 30 days 227 

Papers, subpoena for production of 220 

Passes — limitations upon issuance of 189 

To commissioners and employees 184 

Passengers — transfer of between carriers 193 

Penalties — act or omission of officer or employee deemed to be act of public 

utility 238 

Actions to recover 239 

Cumulative 236 

For issue of bonds, stocks, etc., in non-conformity with order or contrary 

to provisions of act 217 

For violation of act or of, orders of Commission by officers of corpora- 
tions other than public utilities 239 

Misapplication of proceeds of sale of stocks, bonds, etc 217 

Moneys recovered to be paid into general fund 239 

Negotiation of sale of bonds, stocks, etc., issued in violation of act 217 

Obtaining order by false representation 217 

Prescribed for violations by corporations other than public utilities 238 

Public utilities subject to, for violation of law or of order of Commission. 237 

Suit to recover, not bar to other action 236 

Upon any officer, agent, employee who authorizes, etc., issue of stocks, 

bonds, etc., contrary to act 217 

Violation of law or of order of Commission 238 



290 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Page 

Pending — proceedings, not affected by this act 240 

Permits — corporation, not to be capitalized 216 

Of proper public authorities must be had 212 

Person defined 176 

Physical connections — between telephone and telegraph companies 205 

Commission may order between carriers 203 

Physical valuation of property — Commission to ascertain 209 

Pipe line corporation denned 178 

Pipe line defined 177 

Powers of Commission generally stated 199 

Commission has certain powers of courts of record 219 

Practice — rules of 219 

Preferences by public utilities prohibited 192 

Preliminary order may be secured 212 

Premises — public utility shall be open to Commission 209 

President of Commission 181 

Private spurs — Commission may require carrier to switch to 204 

Privileges — must be uniform 189 

Proceedings of Commission, report of 185 

Proceeds of securities — public utility must account for 216 

Process — assistant secretary to serve 181 

Extends to all parts of state 219 

Property — acquisition of, issue of stocks, bonds, notes, etc 214 

Valuation of, by Commission 209 

Property which may be sold 213 

Public convenience — certificate of 211 

Public inspection — information furnished to Commission not open to 198 

Schedules of carriers to be open to 185 

Public to be protected by Commission from poor service or inadequate facilities 201 

Public — meetings of Commission to be 183 

Public utilities — Commission to control all 199 

Charges must be reasonable 185 

Public utility corporations — foreign, limitations placed on 197 

Public utility, defined 180 

May complain to Commission 226 

Use of joint facilities 205 

Public Utilities — all must report to Commission 198 

Must answer all questions of Commission 198 

Must furnish copies of records 198 

Must furnish complete inventory of property 198 

Information confidential unless ordered published by 198 

Violation of confidence a misdemeanor 198 

Must report annually 198 



INDEX. 291 



PUBLIC UTILITIES ACT— Continued 

Public Utilities— Continued Page 

Must obey all orders of Commission 199 

Must not discriminate between localities nor classes of service 192 

Must not grant special privileges 192 

Qualifications of Commissioners 182 

Quorum of Commission — what constitutes 183 

Railroad Commission fund — moneys to be credited to 242 

Railroads — Commission may order track connections with street car lines 203 

Railroad corporation defined 177 

Railroad defined 177 

Rates — automatic adjustment of 193 

Commission to fix 199 

Commission to investigate 200 

Commission may alter or modify 227 

Commission may suspend 227 

Increases of 227 

Period for which may be suspended 227 

Schedules of, to be filed 185-187 

To be changed only on notice to Commission . t . . 187 

When to go into effect 227 

Common carriers must publish and file interstate 192 

Compensation for transportation may not differ from published 189 

Rates, joint — Commission to fix 200 

Must be established 194 

Public utility, may not be changed without 30 days' notice, except 187 

Public utility — must be same to all 191 

Public utilities must publish 187 

Telephone — Commission may fix 205 

Commission may establish joint rates 205 

Telegraph — Commission may fix 205 

Commission may establish joint rates 205 

Telephone and telegraph — regulation of long and short distance 195 

Record of proceedings before Commission and testimony made by reporter. . . . 226 

Public utilities to furnish copies to Commission on demand 198 

What shall constitute 226 

Recorded — certified copies of records, orders, etc., may be 222 

Records — kept out of State — to be produced if Commission requires 224 

of public utilities — Commission to have free access to all 224 

Commission to prescribe forms for 210 

Reduced rates — prohibited except in specified cases 189 

Refunding issue of stocks, bonds, notes, etc 214 

Refunds by carriers prohibited 189 

Cannot be made, except by order of Commission 189 

Prohibited 191 



292 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Page 

Regulations — changes in to be approved by Commission 187 

Of public utilities to be reasonable 185 

Regarding disposition of moneys from sale of stocks, bonds, etc 216 

Public utilities must publish 187 

Rehearing — application for, does not of itself stay order 228 

Application for, when order is suspended 229 

Application for, time within which shall be granted or denied 229 

What shall be set forth in application for 228 

Who may apply for and when 228 

Denial of .... : 229 

Orders of Commission must be obeyed pending 229 

Applications for 228 

No cause for action until after application for 228 

Grounds must be set forth in application for 228 

Removal of commissioner 181. 

Repeal — acts repealed by this act 242 

Repairs — power of Commission to order 202 

Reparation — of excessive or discriminatory charges and interest 234 

Reports — annual, made by all public utilities 198 

Commission to make annually 185 

Of accidents to be filed with Commission 207 

To be furnished to Commission by public utilities 198 

Re-valuations — Commission may make 209 

Review — stipulation as to record on 226 

Superior Court has no jurisdiction 230 

Writ of, no new or additional evidence to be introduced on hearing 229 

What shall constitute record in action to 226 

Who may appear 230 

Writ of, when lies to Supreme Court 229 

Writ of, when returnable 229 

Rights of action — this Act does not effect 236 

Rules — for performance of service or furnishing of commodity to be prescribed 202 

Of Commission to be complied with 199 

Prescribed by public utilities to be reasonable 185 

Rules of practice — to govern hearings 219 

Rules — public utility must be reasonable 185 

Public utilities must publish 187 

Rebates — procuring of, by false billing, etc., prohibited 195 

Safety devices — power of Commission to order installation 206 

Salaries of Commissioners and employees 184 

Sale — order authorizing to be obtained 213 

Sales — without order of Commission, are void 213 

Scale — sliding, under certain conditions public utilities may establish 193 



INDEX. 293 

PUBLIC UTILITIES ACT— Continued 

Page 

Schedules — approval of changes by Commission 187 

Changes in form to be approved 187 

Filed by carriers to show what 186 

Of carriers to conform to those prescribed by Interstate Commerce 

Commission 186 

Of public utilities other than carriers to be filed 187 

Of sliding scales to be filed 193 

Of telephone or telegraph corporations' interstate rates to be filed 192 

Showing joint tariffs, filing of 188 

Commission may change form of 187 

Form of, to be prescribed by Commission 186 

Must be kept open to public 186 

Where kept 186 

Seal — courts must take judicial notice of 183 

Of Commission, form of 183 

Of Commission to be affixed to papers 183 

Secretary of Commission 181 

Securities — conditions under which public utilities may issue 214 

Issue must be authorized by Commission 215 

Investigations by Commission 215 

Issuance of, by public utilities a special privilege 214 

Proceeds from sale of shall be expended as ordered by Commission 216 

Issued without order of Commission are void 217 

Penalty for misuse of proceeds of sale of 217 

Penalty for fraudulent issue of 217 

Approval of, by Commission, no guarantee 218 

Authority of articles of incorporation, vote of stockholders or directors 
previous to taking effect of this Act not sufficient for issuing without 

order of Commission 219 

Service — Commission to protect public from poor 201 

Improvements of, Commission to order 202 

Commission to regulate quality of 209 

Commission to regulate measurements of 209 

Upon whom made, and manner of 225 

Regulation of gas, water, electricity 208 

Standards to be fixed by Commission 201 

Short title — of act 175 

Sites — for new structures may be fixed by Commission 202 

Sliding scale — of charges permissible 193 

Schedules of, to be filed 193 

Special privilege — issuance of securities by public utilities, a 214 

Special privileges — public utilities must not grant 192 

Spur connections — duty of carriers to install 196 



294 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Page 

Spur tracks — duty of carrier to install 196 

Power of Commission on refusal of carrier to install 204 

Railroads must provide upon application provided 196 

Stage and auto stage lines under control of Commission 201 

Stage lines — joint rates with common carriers t . . 201 

Standards of service — to be fixed by Commission 202 

Of service prescribed 209 

Stationery to be procured by Commission 183 

Statisticians — employment of 182 

Street car fare 5 cents within city limits, except 197 

Street car lines — Commission may order track connections with railroads 203 

Stock — account of moneys derived from sale of 216 

Approval of, by Commission, no guarantee 218 

Authority of articles of incorporation, vote of stockholders or directors 
previous to taking effect of this act not sufficient for issuing without 

order of Commission 219 

Authorized by utilities prior to act and not issued 219 

Commissioners or employees must not own, except 182 

Conditions under which public utilities may issue 214 

Investigations by Commission 215 

Issue must be authorized by Commission 215 

Issue of, subject to regulation 214 

Issued without order of Commission are void 217 

May issue less than, equivalent to or greater than authorized or subscribed 

capital stock 215 

No public utility may acquire stock of other corporations without permission 214 

Of other public utilities, purchase of 214 

Penalty for fraudulent issue of 217 

Proceeds of sale, applied to purpose specified 216 

When issue valid 217 

When issue void 217 

Stock transfers in violation are void 214 

Stops — power of Commission to prescribe 203 

Street car transfers must be given 197 

Street railroad corporation defined 176 

Street railroad, defined 176 

Fare to be charged within city 197 

Subpoenas — issuance of 219 

Suit to recover penalties not bar to other action 236 

Summary proceedings by Commission authorized 236 

Summons — issuance of 219 

Superior Court — to compel attendance of witnesses and production of books, etc. 220 

No jurisdiction in review 230 



INDEX. 295 



PUBLIC UTILITIES ACT— Continued 

Superior Court — Continued Page 

To entertain suits by Commission against public utilities 236 

Supreme Court — exclusive jurisdiction to review order of Commission 229 

Judgment of — what shall contain 230 

May issue writ of mandamus 230 

May order money impounded on stay of order 231 

May suspend order of Commission 230 

No new or additional evidence to be introduced in 229 

Procedure on writ of review 229 

Switch connections — duty of carrier to install 196 

Power of Commission on refusal of carrier to install 204 

Switching service — Commission may require to private spurs 204 

Systems — Commission to prescribe form of 210 

Telegraph corporation, defined 179 

Telegraph corporations — Commission may order physical connections 205 

To file schedules of interstate rates 192 

To transmit messages of another telegraph corporation 194 

Telegraph line, defined 179 

Telegraph messages — free delivery of 208 

Telephone corporation, defined 179 

Telephone corporation — Commission may order physical connections, defined.. 205 

"Long and short haul" rule applied to 195 

To file schedules of interstate rates 192 

To transmit messages of another telephone corporation 194 

Telephone line, defined 179 

Telephone messages — free delivery of 208 

Telephone and telegraph corporations must interchange business under certain 

conditions 194 

Tender — duty of public utility on tender of proper charges 202 

Testimony — tending to incriminate 222 

Transcript of, on action to review order 226 

Tests of service, gas, water, electricity 208 

Time schedules — power of Commission to prescribe 203 

Track connections — power of Commission to order 203 

Traffic — power of Commission to order additional cars to accommodate 203 

Train service — Commission may order sufficient number of trains to accommo- 
date traffic 203 

Commission may change schedules 203 

Commission may change stopping places 203 

Commission may make reasonable regulations for accommodation of traffic 203 

Transfer — of passengers and tonnage between carriers 193 

Transfers — on street cars must be given 197 

To be issued by street railroad 197 



296 LOUIS SLOSS & CO. 



PUBLIC UTILITIES ACT— Continued 

Page 

Transportation — free and reduced rate prohibited, except 190 

Free, of express matter, for personal use 190 

Further prohibitions regarding free or reduced rate 190 

In exchange for advertising 190 

Of property, defined 176 

Of persons, defined 176 

Special cases when free and reduced rate may be allowed 191 

Unreasonable charges — unlawful 185 

Vacancy — in Commission, effect of 183 

In office of Commission, how filled 181 

Valuation of property — Commission may consider any information available. . . 233 

Commission shall file findings 233 

Hearing on, notice 233 

Hearings had from time to time 234 

Of public utility 233-209 

Commission to ascertain 209 

Valuation of public utilities — hearings by Commission to ascertain 233 

Preliminary examination 233 

Evidence 233 

Findings of Commission subject to review by Supreme Court 233 

Findings of Commission admissable as evidence in any action 233 

Further hearings 234 

Venue — of action by Commission against public utility 236 

Of action to recover penalties 239 

Vessel, defined 180 

Warehouseman, defined 180 

Warrant — of attachment, issue of 219 

Of commitment 219 

Water corporation — defined 179 

Water system, defined 179 

Wharfinger, defined 180 

Witness — fees and mileage 220 

Process to issue to enforce attendance of 220 

May be subpoenaed 225 



INDEX. 297 



Rules of Practice and Procedure. 

Page 

Acquisition of capital stock of another public utility — applications for 258 

Amendments of rules 266 

Answer to complaint — form of 269 

Answer to formal complaint — form of 270 

"Application" defined 244 

Applications — general matters applicable to all 252 

Contents of application 252 

Documents filed with application 253 

Procedure of Commission on filing of petition 253 

Applications — miscellaneous 265 

Assignment of property — applications for 257 

Bonds — applications for order authorizing issue of 259 

Capital stock — acquisition of, of another public utility, applications for 258 

Charges — applications for permission to make increases in 262 

Discriminatory, application for permission to refund 264 

Excessive, applications for permissions to refund 264 

"Commission" defined 243 

Communications — to Commission 245 

"Complaint" defined 243 

Complaints — who may complain 247 

Contents of 247 

Signature of 248 

Copies of, to accompany complaint 248 

Procedure of Commission on filing of 248 

Settlement of 249 

Answer to 249 

Procedure when complaint is contested 249 

Construction — new, or extensions, applications for 255 

Crossings — railroad, applications for construction of 253 

Alteration of 253 

Abolition of 253 

Safety devices 254 

Data — applications for extensions of time to file 264 

Deviations from rules — authorizations for 265 

Disposition of property — applications for 257 

Documents filed with application 253 

Documents — to be uniform in size 246 

Evidences of indebtedness — applications for order authorizing issue of 259 

Extensions, or new construction — applications for 255 

Extensions of time — applications for 264 

To file required reports 264 

To file statements 264 

To file data 264 

To comply with Commission's orders 264 



298 LOUIS SLOSS & CO. 



RULES OF PRACTICE AND PROCEDURE— Continued 

Page 

"Financial Condition" defined 244 

Financial condition — stock authorized 244 

Stock outstanding 244 

Preferred stock 244 

Mortgage, description of 244 

Bond issues 244 

Other indebtedness, description of 244 

Interest, amount of 244 

Dividends, amount of 244 

Earning statements 245 

Formal application — form of 268 

Formal complaint — form of 266 

"Formal Proceedings" defined 243 

Formal proceedings— address of Commission 245 

Case numbers 245 

Form and size of papers filed 246 

Amendments 246 

Subpoenas 246 

Service of papers 246 

Filing or entry and service of orders 246 

Intervention 247 

Forms prescribed for use 266 

Franchises and permits — applications for permission to exercise 256 

Hearings and rehearings 249 

When hearing will be given 249 

Notice of place of hearing 249 

Stipulation as to facts 250 

Procedure at hearings 250 

Adjournments 251 

Briefs 251 

Investigations on Commission's own motion 251 

Rehearings 251 

Cases, classes of — entitled to hearing 249 

Documentary evidence 250 

Submission of briefs 251 

Lease of property — applications for 257 

Long and short haul rule 263 

Information required with applications relating to 263 

Meetings of Commission 245 

Mortgage of property — applications for 257 

New construction, or extensions — applications for 255 

Notes — applications for order authorizing issue of 259 

Notice of hearing on complaint 271 

Office in San Francisco 245 



INDEX. 299 

RULES OF PRACTICE AND PROCEDURE— Continued 

Page 

Order to satisfy — form of 269 

Orders — copy must be served upon defendant 246 

Must be in writing 246 

Of Commission — applications for extensions of time to file 264 

Permits and franchises — applications for permission to exercise 256 

Petition — procedure of Commission on filing of 253 

Pleadings — may be amended 246 

Procedure of Commission on filing of petition 253 

Proceeds of sale securities — use of 262 

Property — value of, of public utilities 252 

Public utility — acquisition of capital stock of another, applications for 258 

"Public Utility" defined 243 

Public utilities — value of property of 252 

Published notice of hearing on application — form of 272 

Railroad crossings — applications for construction of, alteration of, abolition of 253 

Safety devices 254 

Rehearings (see Hearings) 249 

Reports — applications for extensions of time to file 264 

Rules — amendments of 266 

Deviations from 265 

Safety devices at railroad crossings — applications for 254 

Sale of property — applications for 257 

Secretary to furnish information 245 

Service — personal 246 

By registered mail 246 

Upon attorney 246 

Sessions of Commission 245 

Open to public 245 

May be held — where 245 

Spurs and switch connections — complaints for 251 

Information required with 251 

Map required with 251 

Statements — applications for extensions of time to file 264 

Stocks — applications for order authorizing issue of 259 

Subpoenas — Commission may issue subpoenas for the production of records... 246 

Switch connections and spurs — complaints for 251 

Information required with 251 

Map required with 251 

Value of property of public utilities 252 



MAY 9 1912 



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